If a fraudster manipulates the assumptions used to calculate depreciation charges in order to increase earnings to a desired figure, which general method of financial statement fraud is the fraudster using?

Question

Business

Ulises

15 May, 05:12

If a fraudster manipulates the assumptions used to calculate depreciation charges in order to increase earnings to a desired figure, which general method of financial statement fraud is the fraudster using?

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Answers (1)

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Milton Massey · Answer 1

The correct answer is letter "D": Playing the accounting system.

Explanation:

An accounting system implies having a set method to enter transactions of a company that allows recording the inflows and outflows of the entity to eventually, after a period of time, determining if the organization was able to reach its objectives or if there are adjustments that must be done to accomplish those goals.

Thus, if a fraudster guesses what the depreciation of the assets of a company is to increase earning, that individual is playing the accounting system.