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 element of the fraud triangle can cause managers to make mistakes and errors that harm the organization or employees?

Opportunity

Pressure

Rationalization

Segregation of duties

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Verified step by step guidance

Understand the fraud triangle: The fraud triangle consists of three elements—Pressure, Opportunity, and Rationalization—that explain why individuals commit fraud.

Analyze the element 'Pressure': Pressure refers to external or internal forces that compel individuals to act unethically, such as financial stress or unrealistic performance expectations.

Evaluate the element 'Opportunity': Opportunity arises when there are weaknesses in internal controls, such as lack of oversight or segregation of duties, allowing individuals to commit fraud without detection.

Consider the element 'Rationalization': Rationalization is the mental justification individuals use to excuse unethical behavior, such as believing their actions are harmless or necessary.

Segregation of duties is not part of the fraud triangle but is a control mechanism to reduce opportunity for fraud. The element most likely to cause managers to make mistakes and errors is 'Pressure,' as it can lead to poor decision-making under stress.