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 would be considered an analytical procedure in the context of detecting fraud?

Counting physical inventory items

Inspecting supporting documents for individual transactions

Comparing current-year financial ratios to prior years' ratios

Sending confirmation letters to customers regarding account balances

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Verified step by step guidance

Understand the concept of analytical procedures: Analytical procedures involve evaluating financial information by studying plausible relationships among both financial and non-financial data. They are often used to identify unusual trends or discrepancies that may indicate fraud.

Review the options provided in the problem: Analytical procedures focus on comparisons, trends, and relationships rather than direct physical or documentary inspection.

Eliminate options that do not align with the definition of analytical procedures: Counting physical inventory items and inspecting supporting documents for individual transactions are substantive procedures, not analytical ones. Sending confirmation letters to customers is a form of direct verification, not an analytical procedure.

Identify the option that involves comparison and analysis: Comparing current-year financial ratios to prior years' ratios fits the definition of analytical procedures because it involves evaluating trends and relationships in financial data.

Conclude that the correct answer is the option involving financial ratio comparison, as it aligns with the purpose of analytical procedures in detecting fraud.