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 element of the fraud triangle is most directly related to a business firm's duty to exercise reasonable care to protect its business invitees?

Collusion

Opportunity

Pressure

Rationalization

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Verified step by step guidance

Understand the fraud triangle: The fraud triangle consists of three elements—Pressure, Opportunity, and Rationalization. These elements explain why individuals commit fraud.

Define 'Opportunity': Opportunity refers to the circumstances that allow fraud to occur. It is the element that a business can most directly control by implementing strong internal controls and safeguards.

Relate 'Opportunity' to the business firm's duty: A business firm's duty to exercise reasonable care to protect its business invitees involves creating an environment where fraud or harm is less likely to occur. This aligns with reducing opportunities for fraud or misconduct.

Eliminate other options: 'Pressure' refers to personal or financial stress that motivates fraud, and 'Rationalization' refers to the justification of fraudulent behavior. Neither of these is directly related to the firm's duty to protect invitees.

Conclude that 'Opportunity' is the correct answer: By exercising reasonable care, the firm minimizes opportunities for fraud or harm, fulfilling its duty to protect business invitees.