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 statements is true regarding the fraud triangle in financial accounting?

The fraud triangle consists of opportunity, pressure, and rationalization.

The fraud triangle includes detection, prevention, and correction.

The fraud triangle is only applicable to manufacturing fraud.

The fraud triangle focuses solely on internal controls.

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Verified step by step guidance

Understand the concept of the fraud triangle: The fraud triangle is a model used in financial accounting to explain the factors that lead to fraudulent behavior. It consists of three elements: opportunity, pressure, and rationalization.

Clarify the meaning of each element: Opportunity refers to the ability to commit fraud due to weak internal controls or lack of oversight. Pressure refers to financial or personal stress that motivates an individual to commit fraud. Rationalization is the justification or reasoning an individual uses to make fraudulent actions seem acceptable.

Evaluate the first statement: 'The fraud triangle consists of opportunity, pressure, and rationalization.' This aligns with the definition of the fraud triangle and is likely the correct answer.

Analyze the second statement: 'The fraud triangle includes detection, prevention, and correction.' This is incorrect because these are elements of fraud management, not the fraud triangle.

Review the third and fourth statements: 'The fraud triangle is only applicable to manufacturing fraud' and 'The fraud triangle focuses solely on internal controls.' Both are incorrect because the fraud triangle applies broadly to all types of fraud and includes factors beyond internal controls.