CFE – Financial Transactions and Fraud Schemes — Question 9

Which of the following is the MOST LIKELY result of a financial statement fraud scheme?

Answer options

• A. Understated assets
• B. Overstated liabilities
• C. Overstated revenues
• D. Understated equity

Correct answer: B

Explanation

The correct answer is B, as financial statement fraud often involves overstating liabilities to hide losses or inflate profits. Options A, C, and D do not typically align with the objectives of such fraudulent schemes, which mainly aim to misrepresent financial health by manipulating liability figures.