Dylan, the accountant of Skylar Constructions, is being suspected for altering entries in the books of accounts and transferring the difference to a separate account. Dylan has recently bought a luxury car. You are appointed to investigate the fraud
Which of the following is a good preliminary hypothesis for the case?
A) Skylar uses perpetual inventory method which reduces the probability of detection of fraud.
B) Dylan shares a good rapport with the auditor of the company, enhancing the opportunity to commit fraud.
C) Dylan recently bought a luxury car, the sources of funds for which is yet to be determined.
D) The financial statements of the company are reported quarterly, increasing the probability of detection.
B
Explanation: B) A hypothesis is not a statement of fact-it is simply an educated guess about how something works or an explanation for an event. In this case, the fact that Dylan shares a good rapport with the auditor of the company is a probable opportunity for committing the fraud and gives a possible explanation for the suspected fraud.
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