Which of the Following Fraudulent Activities Most Likely Could Be

question 1

Multiple Choice

Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle?

• A)Merchandise received is not promptly reconciled to the outstanding purchase order file.
• B)Obsolete items included in inventory balances are rarely reduced to the lower of cost or market value.
• C)The write-off of receivables by personnel who receive cash permits the misappropriation of cash.
• D)Fictitious transactions are recorded that cause an understatement of revenue and overstatement of receivables.

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Definitions:

Prior Unenforceable Obligations

Refers to commitments or agreements that were not legally binding or couldn't be enforced due to certain conditions or deficiencies in their formation.

Consideration

Something of value (such as goods, services, money, or a promise) exchanged between parties in a contract.

Preexisting Contract

An agreement that was already in place before certain actions were taken or before a dispute arose.

Modification

The act of making changes or alterations to something, such as a document or agreement, often to improve it or make it more suitable.