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

According to the principles of the fraud triangle, which of the following best describes the responsibility of a licensed business and its employees regarding customers' illegal or disorderly activities?

Employees are solely responsible, not the business itself.

A licensed business and its employees are generally not responsible for customers' illegal or disorderly activities unless they are complicit or negligent.

Responsibility only applies if the business is unlicensed.

A licensed business and its employees are always legally responsible for any illegal or disorderly activities committed by customers.

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Verified step by step guidance

Step 1: Understand the fraud triangle concept, which includes three elements: opportunity, pressure, and rationalization. These elements explain why individuals commit fraud.

Step 2: Recognize that the fraud triangle is primarily used to analyze internal fraud within organizations, not external activities like customer behavior.

Step 3: Evaluate the legal responsibility of a licensed business and its employees. Generally, they are not responsible for customers' illegal or disorderly activities unless they are complicit (actively involved) or negligent (failing to take reasonable precautions).

Step 4: Note that being licensed or unlicensed does not inherently change the responsibility unless specific laws or regulations apply to the business type.

Step 5: Conclude that the correct interpretation aligns with the principle that responsibility arises only in cases of complicity or negligence, not for all customer actions.