Smart fraudsters will avoid financial statement fraud involving the overstatement of ________ because of the compounding effect from period to period.
A) Revenue
B) Accounts receivable
C) Inventory
D) Fixed assets

Question

Quizplus · Accepted Answer

C: Correct; Overstating inventory in period 1 makes it necessary for perpetrators to overstate ending inventory in period 2 by an even larger amount in order to both offset the effect of having an overstated beginning inventory and to commit additional fraud.

Smart Fraudsters Will Avoid Financial Statement Fraud Involving the Overstatement