An Example of Fraud in Financial Reporting Would Be

question 50

Multiple Choice

An example of fraud in financial reporting would be

• A)allowing orders to be cancelled.
• B)arriving at a P/E using the weighted average number of shares outstanding during the year.
• C)inflating revenues by recording income from contracts which will extend beyond one year.
• D)advising your auditors about a change in accounting procedures.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available for running day-to-day operations.

Historical Relationship

Patterns or linkages identified through the analysis of past data, often used for forecasting future trends or dynamics.

Bad Debt Expense

An estimated expense that represents accounts receivable that a company does not expect to collect due to customer defaults.

Net Credit Sales

The total amount of sales made on credit minus returns and allowances, representing actual sales revenue.