A Manufacturer Uses Improved Linkage Between Order Entry, Production, and Shipping

question 122

Multiple Choice

A manufacturer uses improved linkage between order entry, production, and shipping to reduce raw materials and work-in-process inventory. Which type of fraud will these changes likely reduce?

• A) Payment of fraudulent invoices.
• B) Purchases from a related party.
• C) Theft of resources from inventory.
• D) False reporting of hours worked.

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Definitions:

Operating Capacity

The maximum output a company can produce in a given period under normal conditions, influencing its ability to meet demand.

Total Assets

Total Assets represent the sum of all the assets owned by an entity, including both current and non-current assets.

Dividend Payout Ratio

A financial metric that shows the percentage of a company's earnings paid out to shareholders as dividends over a period.