Lecture 4

Question 1

What is fraud triangle and what are 3 factors enabling fraud?
Por

Answer 1

1.pressure
2. Opportunity
3. Rationalisation

Question 2

What is 4 finacial statements?

Answer 2

1. Profit or loss
2. Finacial position
3. Cash flow
4. Changes in equity

Question 3

What does propbable economic benefit do?

What is cost/value of the Item?

Answer 3

Probable economic benefit = flow to and from the company
Cost value item is measurable with reliability

Question 4

4 measurement basis
1. Historical
2. Current cost
3, realisation / settlement
4. Present value

What is correct answer for measurement basis in finacial statements

Answer 4

Historical and present value : objective

Realisation and current : less objective prone to ethical dilemmas

There is no single correct answer for measurement basis in financial staments

Question 5

What is qualitative characteristics of useful information?

Answer 5

• must be relevant and faithurfully represented
• enhanced by comparability, verifability, timeliness and understandability

Question 6

What might misstatements be?

What 3 things does fraud involve?

Answer 6

1. Fraud or error
2. Manipulation , misrepresentation , international omissions