Which of the following is a valid reason behind the prevalence of revenue-related financial statement fraud?
A) It is easy to manipulate net income using revenues and receivables accounts.
B) Revenue-related frauds are difficult to hide from detection.
C) A reversing effect of the fraud automatically occurs in the subsequent period.
D) Auditors generally focus more on balance sheet items than on revenue accounts.

Question

Quizplus · Accepted Answer

Revenue-related financial statement fraud is prevalent because it is easy to manipulate net income using revenues and receivables accounts by falsely recording revenue or inflating accounts receivables. This can lead to financial statement fraud being committed in order to meet earnings targets or to cover up losses.

Which of the Following Is a Valid Reason Behind the Prevalence