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 is NOT an example of risk retention in the context of fraud prevention?

Setting aside a reserve fund to cover possible fraud-related losses

Accepting minor losses from petty cash discrepancies

Choosing not to implement additional fraud controls due to cost considerations

Purchasing insurance to cover potential fraud losses

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Verified step by step guidance

Understand the concept of risk retention: Risk retention involves accepting the financial impact of a risk rather than transferring it to another party, such as through insurance.

Analyze each option provided in the question to determine whether it aligns with the definition of risk retention.

Option 1: Setting aside a reserve fund to cover possible fraud-related losses is an example of risk retention because the organization is preparing to absorb the financial impact of fraud internally.

Option 2: Accepting minor losses from petty cash discrepancies is also an example of risk retention, as the organization is choosing to tolerate these small losses rather than taking additional measures to prevent them.

Option 3: Choosing not to implement additional fraud controls due to cost considerations reflects risk retention, as the organization is accepting the risk of fraud rather than investing in preventive measures. However, Option 4 (Purchasing insurance to cover potential fraud losses) is NOT risk retention, as it involves transferring the risk to an insurance provider.