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:

Wage Rate

The compensation paid to employees for their labor, typically expressed as an amount per hour, day, or unit of work.

Production Function

A mathematical model that describes the relationship between input factors (like labor and capital) and the output of goods or services.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing to purchase at each price level.

Wage Rate

The amount of money paid to an employee by an employer in exchange for work performed, usually expressed per hour, day, or piece.