Rationale for Correct Answer:A false balance occurs when incorrect totals are intentionally carried forward from the journal to the ledger or from the ledger to the financial statements. This is often used as a concealment technique in fraud to make the books appear balanced while hiding irregularities.
Analysis of Incorrect Options:
A. Forced Balance – Involves adding fictitious entries to force accounts into balance.
B. Out-of-balance – Results when entries don’t match, but not specifically from carried totals.
D. None of all – Incorrect since “false balance” is the precise term.
Key Concept:False balance entries as concealment techniques in fraudulent bookkeeping.
[Reference:ACFE Fraud Examiners Manual (2020 International Edition), Accounting Concepts — Concealment by False Balances., , ]
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