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

What is the primary reason that so many new businesses fail, according to the Fraud Triangle framework?

Lack of sufficient internal controls, leading to increased opportunity for fraud

Excessive government regulation

High employee turnover

Overinvestment in marketing

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Verified step by step guidance

Understand the Fraud Triangle framework, which consists of three elements: Opportunity, Pressure, and Rationalization. These elements explain the conditions under which fraud is likely to occur.

Focus on the 'Opportunity' element of the Fraud Triangle. Opportunity arises when there are weaknesses in internal controls, allowing individuals to commit fraud without detection.

Analyze the options provided in the question. The correct answer should align with the concept of 'Opportunity' in the Fraud Triangle, which is directly related to the lack of sufficient internal controls.

Eliminate options that do not pertain to the Fraud Triangle framework. For example, excessive government regulation, high employee turnover, and overinvestment in marketing are not directly related to the opportunity for fraud.

Conclude that the primary reason many new businesses fail, according to the Fraud Triangle framework, is the lack of sufficient internal controls, which increases the opportunity for fraud.