Question

Why is it easier for someone to perpetrate fraud using a journal entry than with a ledger?

Answer 1

Solution. When an organization decides to enter into a competitive economic market, it sets general objective of meeting profit level along with social impact in society. To sustain in business, organization needs to make decision relating to different organizational activities, for that it requires to record and analyze financial statements. In case of commitment of fraud, it is easier to perpetrate using journal entry than ledger, as ledger accounts are prepared from the transferred value from journal entries passed by the individual. So in initial stage of preparation of financial statements, fraudulent activities can be done while passing journal entries than following activities.