Which of the following is a characteristic of fraudulent journal entries?
A) These contain exact numbers or inconsistent ending numbers.
B) These are generally recorded at the beginning of the period.
C) These are made to regularly used accounts.
D) These are applied to intercompany or related parties.
D
Explanation: D) Fraudulent JEs have several common characteristics:
• JEs made to unrelated, unusual, or seldom-used accounts
• JEs recorded at the end of the period or as post-closing entries with little or no explanation
• JEs containing round numbers or a consistent ending number
• JEs applied to intercompany or related parties
You might also like to view...
SEC Rule 506 is known as the ________
A) nonissuer exemption B) intrastate offering exemption C) private placement exemption D) interstate offering exemption
Which of the following would be a valid reason for the parent company to convert a branch into a locally organized subsidiary?
A. to insulate the parent company from local liability B. to remove the separate legal entity status of the branch C. to bring it under even stricter supervision of the parent company D. to decrease local participation in the branch