Roughly half of all financial statement frauds over the past two decades have involved:
A) improper expense recognition.
B) improper revenue recognition.
C) improper depreciation methods.
D) bankruptcy.

Question

Quizplus · Accepted Answer

Improper revenue recognition is the answer. Studies have shown that nearly 50% of all financial statement fraud involves this type of fraud, where companies manipulate their revenue figures to create a false impression of financial health. This can include prematurely recognizing revenue, inflating sales figures, or hiding sales returns and allowances. Improper expense recognition, on the other hand, is not as common, accounting for only 13% of financial statement fraud cases. Similarly, improper depreciation methods and bankruptcy are not as prevalent in financial statement fraud cases.

Roughly Half of All Financial Statement Frauds Over the Past