Fraud in financial statements typically manifests as:

Fraud in financial statements most frequently manifests as overstated assets and revenue, along with understated liabilities and expenses. This approach is often used by fraudulent actors to create a misleadingly positive view of a company's financial position.

When assets and revenue are overstated, it falsely inflates the perceived worth of the company, potentially misleading investors, creditors, and other stakeholders about its profitability and viability. At the same time, understating liabilities and expenses helps to present a more favorable net income and financial health. This combination creates an illusion of financial strength that can facilitate continued investment and operational funds, ultimately allowing the fraud to continue for longer periods before detection.

In contrast, other options offer combinations of understated or overstated figures that do not align with the common techniques employed in financial statement fraud. For example, understated revenue and overstated expenses would typically reflect a more negative financial outlook and wouldn’t serve the purposes of individuals looking to manipulate financial reports for gain. Therefore, the description of overstated assets and revenue while understating liabilities and expenses aligns with typical fraudulent practices observed in financial statement manipulation.