Why Are the Inventory and Cost of Goods Sold Accounts

question 43

Multiple Choice

Why are the inventory and cost of goods sold accounts attractive targets for managerial fraud?

• A)There are few if any procedures that can check for fraud in these accounts.
• B)There are no adequate methods of record keeping for inventory.
• C)These accounts are more significant than most other accounts.
• D)Cost of goods sold and Inventory accounts are not attractive targets of fraud.

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Definitions:

Deadweight Loss

An economic efficiency loss that occurs when market equilibrium is not achieved or when externalities are present, leading to a loss of total welfare.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is unattainable.

Units Bought

Refers to the quantity of a particular good or service purchased by consumers or businesses.

Tax Imposed

A financial charge or other levy placed upon an individual or a legal entity by a state or a functional equivalent of a state.