The Textbook Lists Several Ways to Reduce the Pressures to Commit

question 16

Multiple Choice

The textbook lists several ways to reduce the pressures to commit financial statement fraud, including:

• A) Avoiding setting unachievable financial goals
• B) Maintaining accurate and complete internal accounting records
• C) Having confidential reporting mechanisms to communicate inappropriate behavior
• D) Maintaining accurate personnel records including background checks on new employees

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Definitions:

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account at the time they are determined to be uncollectable.

Expense

Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Asset

Resources owned by a company that are expected to provide future economic benefits, including tangible and intangible items like property, equipment, and trademarks.

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that a company does not expect to collect, treated as a contra-asset account.