Which of the following tends to be the most common method for understating cost of goods sold?
a. Understating purchases
b. Overstating purchase returns
c. Overstating inventory
d. Overstating purchase discounts
c
FEEDBACK: a. Incorrect.
b. Incorrect.
c. Correct. Overstating the ending inventory tends to be the most common fraud because it increases net income and recorded assets, making the balance sheet look better.
d. Incorrect.
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