Chapter_4 - Chapter 4: Fraud and i ts impact 1. Lock box...

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Chapter 4: Fraud and its impact 1. Lock box system: usually used for checks received by mail. Checks sent to mail room are immediately gathered by bank employee and deposited. The remittance advices accompanying checks are electronically scanned and forwarded to the company’s account receivable bookkeeper where they are used as the source documents for posting amounts collected from customers. 2. Lapping: type of fraud know as misappropriation of the assets. Requires motivations and is rationalized. The opportunity to commit this type and other types of frauds arises through weak internal controls. 3. Fraud: an intentional misrepresentation of facts made for the purpose of persuading another party to act in a way which causes injury or damage to that party. 4. Misappropriation of the assets: committed by employees of an entity who steal money from the company and cover it up through erroneous entries in the books. Most common type of fraud. 5. Fraudulent financial reporting: committed by company managers who make false or misleading entries in the books, making financial results appear to be better than they actually are. The purpose is to deceive investors and
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Chapter_4 - Chapter 4: Fraud and i ts impact 1. Lock box...

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