Table of contents

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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

The financial failure of a firm is often due to which of the following elements of the fraud triangle?

Product innovation

Market share

Liquidity

Opportunity

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Understand the fraud triangle, which consists of three elements: Opportunity, Pressure, and Rationalization. These elements explain why individuals commit fraud.

Recognize that 'Opportunity' refers to the ability to commit fraud due to weak internal controls, lack of oversight, or other vulnerabilities within the organization.

Analyze how financial failure can create opportunities for fraud. For example, poor liquidity or financial distress may lead to weakened controls or desperate actions by management or employees.

Eliminate the incorrect options: 'Product innovation' and 'Market share' are not directly related to the fraud triangle. These are business strategies and metrics, not elements of fraud.

Conclude that 'Opportunity' is the correct answer because it directly relates to the conditions that allow fraud to occur, especially in cases of financial failure.