Question

Which of the following is the most common type of financial statement fraud?
a - Overstatement of revenues
b - Undervaluation of liabilities
c - Understatement of losses
d - Overvaluation of reserves

According to the traditional economic theory, which of the following motivates smart, talented, well-educated, and seemingly respectable individuals to commit fraud?
a - Self-interest
b - Pressure
c - Desire
d - Incentive

Which of the following is an example of prosecutorial misconduct?
a - exaggerated medical disability
b - altering financial statements
c - tampering with evidence
d - insider fraud

Answer 1

Ans.1:

There are many types of financial statement frauds but Overstatement of revenues is very common and commonly done by many companies to attract the stakeholders or financial statement users. Therefore, Option A is correct.

Ans.2:

Option A is correct i.e. Self -interest motivates smart, talented, well-educated, and seemingly respectable individuals to commit fraud.

Ans.3:

Option C i.e tampering with evidence is correct as Tampering with evidence means destroying, altering, concealing or falsifying any sort of evidence and it is considered as prosecutorial misconduct.