Three Conditions for Fraud Are Referred to as the "Fraud

question 61

Multiple Choice

Three conditions for fraud are referred to as the "fraud triangle." One of the sides of this triangle is incentives or pressures.The other two sides are

• A)opportunities and a desire to meet debt repayment obligations.
• B)opportunities and attitudes or rationalizations.
• C)attitudes or rationalizations and the need to maintain stock prices.
• D)the need to maintain stock prices and the need to meet debt repayment obligations.

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Definitions:

Principal

The original sum of money borrowed in a loan, or the amount of the investment, not including the interest or profits.

Agency Relationship

A legal bond where one party, the agent, acts on behalf of another, the principal, in dealings with third parties.

Financial Year End

Financial year end is the completion of a one-year, or 12-month, accounting period; the date when companies must finalize their financial statements and report their financial performance.

Reasonable Period

A span of time that is considered fair and appropriate in a given context, especially in legal and contractual situations.