Error and fraud [7 scenarios @ 2 marks each - 14 marks total]

This is an exercise concerning financial reporting misstatements.

Required:

• Give an example of an error or fraud that would misstate financial statements to affect the accounts in the scenarios that follow, takeone case at a time.
• (Note:"Overstate"means the account has a higher value than would be appropriate under GAAP, and"understate"means it has a lower value.)
• Be specific in your explanation and provide illustration of the accounts that would be affected.
• An example for the first one has been provided below.Students should provide their own new example for [1]

EXAMPLE:

[1]Overstate an asset; understate another asset

This could be an example of fraud where the employee at the bank that is responsible for authorizing new loans receivable creates fictitious loans to repay previously created false loans

DR Loan Receivable - FAKE Customer B

CR Loan Receivable - FAKE Customer A

[1] Overstate an asset; understate another asset.

[2] Overstate an asset; overstate shareholder equity.

[3] Overstate an asset; overstate revenue.

[4] Overstate an asset; understate an expense.

[5] Overstate a liability; overstate an expense.

[6] Understate an asset; overstate an expense.

[7]Understate a liability; understate an expense.

(need ASAP)