Multiple Choice
Which of the following is a poor internal accounting control feature?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Which of the following is NOT an example of fraud?
A
Accidentally recording an expense in the wrong account
B
Intentionally overstating revenue to mislead investors
C
Creating fictitious vendors to divert company funds
D
Falsifying documents to conceal theft of assets
Verified step by step guidance1
Understand the concept of fraud: Fraud involves intentional deception or misrepresentation to gain an unfair advantage, typically for financial or personal benefit.
Analyze each option provided in the problem to determine whether it involves intentional deception or misrepresentation.
Option 1: 'Accidentally recording an expense in the wrong account' - This is an error, not fraud, as it is unintentional and lacks deceptive intent.
Option 2: 'Intentionally overstating revenue to mislead investors' - This is fraud because it involves deliberate misrepresentation to deceive stakeholders.
Option 3: 'Creating fictitious vendors to divert company funds' and Option 4: 'Falsifying documents to conceal theft of assets' - Both are examples of fraud as they involve intentional acts to deceive and misappropriate resources.
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