Question

A false accounting fraud occurs when assets of a company are overstated or its liabilities are understated in order to make it appear financially stronger than what it is in reality. Which of the following is NOT the reason behind false accounting?

1. Use unique identification and passwords to control access to systems and buildings.
2. To attract customers by appearing more successful than reality.
3. Make payments after multiple authority and signatures.
4. To get loans from banks/financial institutions.

Options

• I & III

• II & III

• III & IV

• I & IV

Answer 1

I & III

Explanation:

Using unique IDs/passwords and requiring multiple-authority signatures are internal controls to prevent fraud, not reasons for false accounting. False accounting motives include attracting customers by appearing successful and obtaining loans from banks.