ACCT 2010 Ch 4 Study Questions and Correct Answers
Fraud An intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party. Types of fraud Misappropriation of assets Fraudulent financial reporting Misappropriation of assets Committed by employees of an entity who steal money from the company and cover it up. * Cash * Inventory * False expense reports Fraudulent financial reporting Committed by company managers who make false and misleading entries in the books * Deceives investors and creditors 3 components of fraud triangle Opportunity Rationalization Motive Opportunity Usually arises when weak internal controls Rationalization The perpetrator(s) is convinced that they deserve the object of the fraudulent behavior. Motive Critical need or greed on part of the perpetrator. Internal control - Primary way fraud and errors are prevented, detected, or corrected. - Management and board of directors implement a plan of organization or system of procedures - Shields company assets from fraud, waste, and unefficiency Objectives of internal control Safeguard assets Encourage employees to follow company policy Promote operational efficiency Ensure accurate, reliable accounting records Comply with legal requirements
Document information
- Uploaded on
- July 24, 2024
- Number of pages
- 5
- Written in
- 2023/2024
- Type
- Exam (elaborations)
- Contains
- Questions & answers
