Which of the following is an accurate statement regarding assets and fraud risk?
A) Companies will often capitalize repairs as fixed assets.
B) Since fixed assets are often large, there is little theft of fixed assets.
C) Intangible assets are recorded at cost and valuation issues therefore are not a fraud risk.
D) Since companies have few fixed assets, there is no need for them to be periodically inventoried.

Question

Quizplus · Accepted Answer

Capitalizing repairs as fixed assets can inflate the value of the assets on the balance sheet, leading to an increased risk of fraud.

Answer: B 
 While theft of fixed assets may be difficult due to their size and immobility, there is still a risk of fraud through manipulation of accounting records or misrepresenting the value of the assets.

Answer: C 
 Valuation issues related to intangible assets, such as goodwill or patents, can create a high risk of fraud as they are often difficult to accurately value.

Answer: None of the above 
 Option D is incorrect as fixed assets are often numerous and valuable, and therefore should be periodically inventoried to prevent fraud.

Which of the Following Is an Accurate Statement Regarding Assets