While Reviewing the Company's Financial Records at Year-End John Notices

question 6

Multiple Choice

While reviewing the company's financial records at year-end John notices two interesting facts, 1) the trial balance does not balance, 2) more entries were made in the first half of the year than the last. Which are large red flags of fraud?

• A) 1
• B) 2
• C) 1 and 2
• D) Neither

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Definitions:

Natural Disaster

A sudden and extreme event caused by natural processes of the Earth that can result in significant damage and loss.

Inward Shift

A decrease in the potential output of a good or service, often represented by a shift to the left of its supply or demand curve.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology, assuming efficient use of resources.

New Technology

Innovations in techniques, tools, devices, or methods that improve efficiency, effectiveness, or utility in processes or product outputs.