Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Which of the following statements about financial abuse and the fraud triangle is true?

Rationalization is not a factor in the fraud triangle.

Financial abuse can only happen in large corporations, not in small businesses.

Financial abuse often occurs when opportunity, pressure, and rationalization are present.

The fraud triangle consists of opportunity, intent, and detection.

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Verified step by step guidance

Understand the fraud triangle: The fraud triangle is a framework used to explain the factors that lead to fraudulent behavior. It consists of three elements: opportunity, pressure (or incentive), and rationalization.

Clarify the role of rationalization: Rationalization is a critical factor in the fraud triangle. It refers to the justification or reasoning that individuals use to convince themselves that their fraudulent actions are acceptable.

Evaluate the statement about financial abuse in small businesses: Financial abuse can occur in any organization, regardless of size. Small businesses are often more vulnerable due to fewer internal controls.

Analyze the correct answer: The statement 'Financial abuse often occurs when opportunity, pressure, and rationalization are present' aligns with the fraud triangle framework, making it the correct answer.

Identify the incorrect elements: Statements such as 'Rationalization is not a factor in the fraud triangle' and 'The fraud triangle consists of opportunity, intent, and detection' are incorrect because they misrepresent the components of the fraud triangle.