One Fraudulent Scheme Covers Up a Theft by Creating Cash

question 57

Multiple Choice

One fraudulent scheme covers up a theft by creating cash through the transfer of money between banks.This is known as

• A)lapping.
• B)misappropriation of assets.
• C)kiting.
• D)concealment.

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Definitions:

Interest Expense

The charges an organization incurs from borrowing funds for a certain time frame.

Capital Lease

A lease agreement in which the lessee essentially buys an asset and borrows the funds through the lease, recording the asset and the liability on their balance sheet.

Implicit Interest Rate

An interest rate inferred from leasing transactions or other contractual arrangements, calculated based on the present value of payments and the initial value of the leased asset.

Present Value Factors

A mathematical formula used to determine the present value of a series of future cash flows by applying a specific discount rate.