Which of the following factors is NOT included in most financial statement schemes?
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A. B. C. D.B
Financial statement schemes are one of the most common types of frauds committed by businesses, where financial statements are manipulated to deceive investors, creditors, and other stakeholders. Such schemes can be perpetrated by creating fictitious revenues, understating expenses or liabilities, or overvaluing assets to create a false impression of financial health.
The answer to this question is B. Persuasive Evidence. Persuasive Evidence is not a factor included in most financial statement schemes. Persuasive evidence is a term used in auditing, referring to the evidence obtained by an auditor to support an assertion in the financial statements. While persuasive evidence is relevant to the audit process, it is not a factor in financial statement fraud.
The other options, A, C, and D, are all factors that may be involved in financial statement fraud schemes.
A. Fictitious revenues: This involves creating false sales or revenue entries in the financial statements to inflate the company's revenue and make it appear more profitable than it actually is.
C. Concealed liabilities and expenses: This involves hiding or understating liabilities or expenses to make the company appear more financially stable than it actually is. This may include understating debt or liabilities, misclassifying expenses, or deferring expenses to future periods.
D. Improper asset valuations: This involves inflating the value of assets, such as inventory or property, to make the company appear more valuable or profitable than it actually is. This may involve overstating the value of assets, failing to properly depreciate assets, or recognizing revenue from assets that have not yet been sold.
Overall, financial statement fraud is a serious issue that can have significant consequences for both the company and its stakeholders. It is important for businesses to have strong internal controls and for auditors to conduct thorough and effective audits to prevent and detect financial statement fraud.