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 elements is part of the fraud triangle?

Materiality

Liquidity

Depreciation

Opportunity

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Verified step by step guidance

Understand the concept of the fraud triangle: The fraud triangle is a model used to explain the factors that lead to fraudulent behavior. It consists of three elements: Opportunity, Pressure (or Incentive), and Rationalization.

Analyze the given options: Materiality, Liquidity, and Depreciation are accounting terms, but they are not part of the fraud triangle. Opportunity, however, is one of the three elements of the fraud triangle.

Define 'Opportunity' in the context of the fraud triangle: Opportunity refers to the circumstances that allow fraud to occur, such as weak internal controls or lack of oversight.

Explain why the other options are not part of the fraud triangle: Materiality refers to the significance of financial information, Liquidity refers to the availability of cash or assets, and Depreciation is the allocation of the cost of an asset over its useful life. None of these relate to the factors that lead to fraudulent behavior.

Conclude that the correct answer is 'Opportunity' because it is one of the three elements of the fraud triangle, which explains the conditions under which fraud can occur.