Fraudulent financial reporting is more likely to result in overstatements of net cash flow from operating activities than as overstatement of net income.

Question

Quizplus · Accepted Answer

Fraudulent financial reporting is more likely to result in overstatements of net income, as it involves manipulation of revenues, expenses, and other figures that directly affect the income statement. Net cash flow from operating activities, derived from the cash flow statement, is less susceptible to manipulation due to its basis on actual cash transactions.

Fraudulent Financial Reporting Is More Likely to Result in Overstatements