Which Fraud Is Most Difficult to Perpetrate for Multiple Years

question 13

Multiple Choice

Which fraud is most difficult to perpetrate for multiple years?

• A) Overstating inventory - because last year's overstatement must be offset in the current year.
• B) Overstating inventory - because physical assets are easily audited making it easy to detect inventory fraud in the long run
• C) Overstating revenue - because auditors focus the most attention on revenue recognition
• D) Overstating revenue - because it is difficult to create fake cash year after year

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Definitions:

Promissory Estoppel

A legal principle that prevents a promisor from arguing that an underlying promise offered should not be legally upheld if the promisee has relied on that promise to their detriment.

Unilateral Contract

A type of contract in which only one party makes a promise to perform in exchange for an act by the other party.

Promissory Estoppel

A legal principle that prevents a party from retracting a promise when the other party has reasonably relied on that promise to their detriment.

Consideration

Something of value that is promised, given, or received in a contract to make it legally binding.