Which of the following best represents a misstatement due to fraudulent financial reporting?
1. Zipup's president requires the assistant controller to eliminate only 40% intercompany profit in the ending inventory of subsidiaries in the year-end consolidation. The financial statements reflect this change.
2. Zipup's GL accountant adjusts depreciation expense to reflect month-end closing entries. The controller reviews the entry without incident.
3. The accounts payable subsidiary ledger failed to update to the general ledger for a difference of $500,000.
4. The warehouse manager takes home one case of premium zippers every night. The periodic inventory count adjusts the inventory for the shrinkage.