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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following situations best illustrates the 'rationalization' factor of the fraud triangle?

An employee believes they deserve a raise and justifies stealing office supplies as compensation.

A cashier notices that there are no security cameras monitoring the cash register.

A manager is under pressure to meet quarterly sales targets and manipulates sales figures.

An accountant is unable to pay personal debts and considers embezzling funds.

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the concept of the 'fraud triangle.' The fraud triangle consists of three factors that contribute to fraudulent behavior: pressure, opportunity, and rationalization. Rationalization refers to the mindset or justification an individual uses to make their fraudulent actions seem acceptable or less unethical.

Step 2: Analyze the given options to identify which one aligns with the rationalization factor. Rationalization involves the individual convincing themselves that their actions are justified, often due to perceived unfair treatment or entitlement.

Step 3: Evaluate the first option: 'An employee believes they deserve a raise and justifies stealing office supplies as compensation.' This illustrates rationalization because the employee is justifying their theft by believing they are entitled to more compensation.

Step 4: Compare the other options to ensure they do not fit the rationalization factor. For example, 'A cashier notices that there are no security cameras monitoring the cash register' aligns with the opportunity factor, and 'A manager is under pressure to meet quarterly sales targets and manipulates sales figures' aligns with the pressure factor.

Step 5: Confirm that the correct answer is the first option, as it best illustrates the rationalization factor of the fraud triangle. Rationalization is about the mental justification of unethical actions, which is clearly demonstrated in this scenario.