Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 24 - Full Disclosure in Financial Reporting - Review and Practice - Questions - Page 1446: 21

Answer

Fraudulent financial reporting entails deliberate omissions intended to create materially misleading financial statements. Fraudulent reporting could entail distortion of an entity's records, such as details of inventory counts or the wrong application of accounting principles, which results in the concealment of material transactions. Comparatively, embezzlement entails the actual theft or misappropriation of company resources.  

Work Step by Step

Fraudulent financial reporting entails deliberate omissions intended to create materially misleading financial statements. Fraudulent reporting could entail distortion of an entity's records, such as details of inventory counts or the wrong application of accounting principles, which results in the concealment of material transactions. Comparatively, embezzlement entails the actual theft or misappropriation of company resources.  
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