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 situations is most likely to lead to unethical behavior in a business setting, according to the fraud triangle?

An employee faces significant financial pressure and perceives an opportunity to commit fraud without detection.

Employees receive regular ethics training and are encouraged to report suspicious activities.

Management fosters a transparent and open communication environment.

A company has strong internal controls and regular external audits.

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Verified step by step guidance

Understand the concept of the fraud triangle, which consists of three elements: pressure, opportunity, and rationalization. These elements explain why individuals may commit fraud.

Analyze the first option: 'An employee faces significant financial pressure and perceives an opportunity to commit fraud without detection.' This aligns with the fraud triangle as it includes both pressure (financial stress) and opportunity (lack of detection).

Evaluate the second option: 'Employees receive regular ethics training and are encouraged to report suspicious activities.' This does not align with the fraud triangle, as ethics training and reporting mechanisms reduce the opportunity for fraud.

Assess the third option: 'Management fosters a transparent and open communication environment.' Transparency and open communication reduce the likelihood of fraud by addressing rationalization and opportunity.

Review the fourth option: 'A company has strong internal controls and regular external audits.' Strong internal controls and audits minimize opportunities for fraud, making this option less likely to lead to unethical behavior.