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 of the fraud triangle refers to the ability of an individual to carry out and conceal fraudulent activities?

Collusion

Opportunity

Pressure

Rationalization

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Verified step by step guidance

Understand 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, and Rationalization.

Define 'Opportunity': Opportunity refers to the ability of an individual to commit and conceal fraudulent activities. It arises when there are weaknesses in internal controls or systems that allow fraud to occur.

Differentiate 'Opportunity' from other elements: Pressure refers to the motivation or need to commit fraud, such as financial difficulties. Rationalization is the justification or reasoning an individual uses to make their fraudulent actions seem acceptable.

Recognize the role of 'Opportunity' in fraud: Opportunity is the element that enables the fraud to happen. Without the ability to carry out and conceal fraudulent activities, the fraud cannot occur, even if pressure and rationalization are present.

Apply the concept: In the context of the question, 'Opportunity' is the correct answer because it directly refers to the ability to carry out and conceal fraudulent activities, distinguishing it from Pressure and Rationalization.