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

How did speculative investing contribute to the instability of the stock market, according to the principles of the fraud triangle?

It eliminated the need for internal controls by making all investments safe.

It increased opportunities for fraud by encouraging risky behavior and reducing oversight.

It decreased the risk of fraud by promoting transparency and ethical investing.

It stabilized the market by ensuring all investors had equal access to information.

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Verified step by step guidance

Understand the fraud triangle, which consists of three elements: opportunity, pressure, and rationalization. These elements explain the conditions under which fraud is likely to occur.

Analyze how speculative investing aligns with the 'opportunity' element of the fraud triangle. Speculative investing often involves high-risk behavior and reduced oversight, creating more opportunities for fraudulent activities.

Consider the 'pressure' element. Speculative investing can create financial pressure on individuals or organizations, as they may feel compelled to take risky actions to achieve high returns or recover losses.

Examine the 'rationalization' element. Investors engaging in speculative behavior might justify unethical actions by believing that high-risk investments are necessary or acceptable in pursuit of financial gains.

Conclude that speculative investing contributes to market instability by increasing opportunities for fraud, encouraging risky behavior, and reducing oversight, as stated in the correct answer.