Which of the following is an example of an obvious financial reporting fraud as discussed in the text?
A)Closing the books at the end of the reporting period.
B)Transferring assets to an affiliate at more than their actual value.
C)Recording as expenses expenditures that should have been classified as expenses.
D)Recording a liability when title to merchandise passes to the purchaser.

Question

Quizplus · Accepted Answer

Transferring assets to an affiliate at more than their actual value is an example of financial reporting fraud known as "overstating assets" or "inflating revenues". This is a deliberate misstatement of the company's financial situation to make it appear more successful than it actually is.

Which of the Following Is an Example of an Obvious