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Rationale for Correct Answer: When cash is stolen, the accounting equation (Assets = Liabilities + Equity) must still balance. Fraudsters may increase a liability (e.g., record fictitious payables) to cover the missing cash. This is a common concealment method.
Analysis of Incorrect Options:
A. Increasing another asset – Would require inflating assets, but this usually affects financial statement fraud, not cash theft concealment.
B. Increasing owners’ equity – Not logical without legitimate earnings or capital contributions.
D. Creating fictitious revenue – Used in financial statement fraud, not in balancing theft concealment.
Key Concept: Concealment methods for asset misappropriation — offsetting missing cash with fictitious liabilities .
Chosen Answer:
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