Which of the Following Signals a Potential Fraud That May

question 49

Multiple Choice

Which of the following signals a potential fraud that may occur for the overstatement of inventory accounts?

• A) Reserves for contingencies are reducing rapidly.
• B) Inventory amounts are growing faster than sales.
• C) Repairs and maintenance accounts have significant credit entries.
• D) The purchase of manufacturing equipment is occurring at a rapid rate.

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Definitions:

Compressive Strength

The capacity of a material or structure to withstand loads tending to reduce size, measured by the maximum stress that a material can sustain under compression.

Injection Molding

The process of producing components by forcing molten material into a mold.

Standard Deviation

A quantification of the extent to which a group of numbers deviates from their average.

Process Capability

A statistical measure of a process's ability to produce output within preset specifications and quality limits.