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 best represents the 'rationalization' component of the fraud triangle?

A company lacks proper internal controls, making it easy to commit fraud.

An employee faces significant personal financial pressure.

A business implements regular audits to detect fraudulent activities.

An employee believes they deserve a raise and justifies stealing from the company.

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Verified step by step guidance

Step 1: Understand the fraud triangle, which consists of three components: opportunity, pressure, and rationalization. Rationalization refers to the mindset or justification an individual uses to convince themselves that committing fraud is acceptable.

Step 2: Analyze the options provided in the problem. The first option, 'A company lacks proper internal controls, making it easy to commit fraud,' relates to the 'opportunity' component of the fraud triangle.

Step 3: The second option, 'An employee faces significant personal financial pressure,' aligns with the 'pressure' component of the fraud triangle, as it describes external circumstances that may motivate fraud.

Step 4: The third option, 'A business implements regular audits to detect fraudulent activities,' is not part of the fraud triangle but rather a preventive measure against fraud.

Step 5: The correct answer, 'An employee believes they deserve a raise and justifies stealing from the company,' represents the 'rationalization' component of the fraud triangle, as it describes the justification an individual uses to make their fraudulent actions seem acceptable to themselves.