Why Are the Inventory and Cost of Goods Sold Accounts

question 142

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)These accounts are more significant than most other accounts.
• C)There are no adequate methods of record keeping for inventory.
• D)Cost of goods sold and Inventory accounts are not attractive targets of frauD.In contrast, selling and administrative expenses are made up of many less significant expenses, and are more difficult to misstate to a great extent.

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Definitions:

Foregone Opportunities

The benefits or income missed out on when choosing one alternative over another.

Tuition

The fee charged for instruction or education provided by schools, colleges, and universities.

Equality

The condition of having equal status, rights, and chances.

Economy

The system by which goods and services are produced, distributed, and consumed in a society or geographic area.