When Analyzing Accounts for Fraud Risk

question 46

Multiple Choice

When analyzing accounts for fraud risk,

• A) companies will generally attempt to overstate accounts payable and net income.
• B) the inventory account is generally not susceptible to fraud since the auditor must verify the existence of the inventory.
• C) payroll is rarely a significant risk for fraudulent financial reporting.
• D) fixed assets are rarely stolen because of their large size.

---

Definitions:

Dichotomized Construct

A concept or variable that is divided into two distinct and mutually exclusive categories.

High-Risk

High-risk refers to a greater likelihood of experiencing negative consequences or danger, often used in contexts related to health, finance, and activities.

Construct System

A framework in psychology that refers to the collection of concepts and beliefs through which an individual perceives, interprets, and judges the world.

Choice Corollary

A concept in Kelly's personal construct theory which suggests that individuals anticipate future events and make choices based on how these events align with their personal constructs.