Archives: Quiz

1) A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company. 2) A company performs 20 […]

1) Payments on an installment note normally include the accrued interest expense plus a portion of the amount borrowed. 2) A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past […]

1) The predetermined overhead allocation rate based on direct labor cost is the ratio of estimated overhead cost for the period to estimated direct labor cost for the period. 2) Credits always increase account balances. Answer: FALSE 3) Partner return […]

1) The three major types of business activities are operating, financing, and investing. 2) A stock dividend reduces a corporation’s assets and its stockholders’ equity. Answer: FALSE 3) Process cost accounting systems are commonly used by companies that produce a […]

1) The term restricted retained earnings refers to both statutory and contractual restrictions. 2) If the internal rate of return (IRR) of an investment is below the hurdle rate, the project should be accepted. Answer: FALSE 3) The Petty Cash […]

1) The accounting rate of return uses cash flows in its calculation. 2) Reversing entries are optional. Answer: TRUE 3) Efficiency refers to how productive a company is in using its assets, and is usually measured relative to how much […]

1) On a work sheet, a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column. 2) Cost of goods sold represents the cost of buying and preparing merchandise […]

1) The purchase of stock in another company is classified as a financing activity. 2) Long-term investments are usually held as an investment of cash for use in current operations. Answer: FALSE 3) A payee of a note usually honors […]

1) Permanent accounts carry their balances into the next accounting period. Moreover, asset, liability and revenue accounts are not closed as long as a company continues in business. 2) An understatement of the ending inventory balance will understate cost of […]

1) Since it is an important financial statement, the trial balance must be prepared according to specified accounting procedures. 2) The cost method of accounting is used for long-term investments in equity securities with significant influence. Answer: FALSE 3) The […]

1) Gain or loss on the disposal of assets is determined by comparing the disposed asset’s book value to the value of any assets received. 2) Internal control devices for banking activities include signature cards, deposit tickets, checks, and bank […]

1) Purchase discounts are the same as trade discounts. 2) A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows. Answer: FALSE 3) Cash paid for merchandise […]

1) To check for accuracy after posting: first a trial balance is completed, then, the subsidiary ledgers are tested by preparing a schedule of the controlling account. 2) One of the usual differences between financial and managerial accounting is the […]

1) A partnership cannot use salary allowances or interest allowances to allocate income and losses to the partners because these items are not reported on the partnership income statement. 2) Ben had total assets of $149,501,000, net income of $6,242,000, […]

1) The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors. 2) An advantage of the weighted average inventory method is that it tends […]

1) Unrealized gains and losses on trading securities are reported on the income statement. 2) The idea that a business will continue to operate instead of being closed or sold underlies the going-concern assumption. Answer: TRUE 3) Traditional two-stage cost […]

1) An employee, having authorized access to a work computer, commits fraud while using the computer. This is an example of a computer crime. 2) Unusual behaviors such as irritability or the inability to relax are examples of analytical anomalies.. […]

1) ________ can have a significant negative impact on award calculation amounts in personal injury and wrongful death over time. U.Deflation V.Inflation W.The payback period X.The accounting rate of return 2) Provide an example of the following: Types of evidence […]

1) How do e-discovery rules have an impact on the storage of e-mail and other electronic files? 2) The amount of loss in commercial damages may be affected by all EXCEPT: U.The general economy V.The conditions of the industry W.The […]

1) What are the primary responsibilities of management? 2) In order to obtain the funds to make bribery payments, employees usually divert company money into ________, a non-company account from which bribes can be made. M.Petty cash N.An overseas account […]

1) What is the difference between skimming and cash larceny? 2) In this scheme, an employee started his own business that would compete directly with his employer. M.Turnaround sale N.Economic extortion O.Business diversion P.Illegal gratuity Answer: C 3) Differentiate between […]

1) Lexis-Nexis is a tool used to corroborate net income. 2) What are some suggested approaches for conducting interviews? Answer: The following provides some guidelines for conducting the interview or interrogation. First, the room should be set up so that […]

1) Management must design, implement, and maintain internal controls and nancial reporting processes to produce timely nancial and nonnancial information that reects the underlying economics of the business. 2) The FDA can determine if an individual is living in poverty. […]

1) Even though independent auditors are independent, management is still responsible for cooperation in order for them to complete their work. 2) Investment banks provide most of the banking services to high net worth individuals in the US. Answer: F […]

1) Compare and contrast Cresseys and Albrechts theories of crime causation. 2) Provide at least five examples of typical internal control weaknesses. Answer: (Answers may include weaknesses not identified here.) Typical internal control weaknesses include: 1>Lack of segregation of duties. […]

1) A written affidavit given by a witness is classified as testimony. 2) What is the role of research in the fraud examination and financial forensics professions? Answer: Research drives professional innovation. Practitioners in the field implement the products of […]

1) What is the difference between fact witnesses and expert witnesses? 2) An operating style that shows excessive risk-taking to strengthen the balance sheet, for example, is generally a red flag for fraud. Answer: T 3) List the four major […]

1) Kickback schemes involve the vendor as an accomplice. 2) The dichotomy of fraud is it cannot occur without trust, but commerce can occur without trust. Answer: F 3) Generally, in order to pursue a claim for legal damages successfully, […]

1) Classify the following as to whether it involves authorization, recording, or custody: 1>Vouching expenses and invoices 2>Payment generation 3>Check signing 4>Check distribution 5>Purchasing 6>Adding a vendor to the master file 7>Approving a new vendor 8>Changing vendor addresses 9>Timekeeping 10>Payroll […]

1) Lifestyle audits, conducted by the IRS, are a means of determining tax evasion. 2) All of the following methods indicate how people commit financial statement fraud EXCEPT: Q.Bribe the SEC to accept fraudulent financial statements R.Playing the accounting system […]

1) Cressey called embezzlers temptation violators. 2) Three ethical principles provide a framework for ethical decision making. What are they? Briefly summarize their assumptions. Answer: The three ethical principles that provide a framework for ethical decision making include: (1) the […]

1) Conspiracy is a means of prosecuting the individuals involved in illegal organized activity. 2) As a general rule, private employers conducting an internal investigation are not required to give: E.Miranda warnings F.Evidence to defense counsel G.Equal opportunity to all […]

1) Risk assessment is a critical aspect of good corporate governance and the same concept is applicable in an information technology environment. 2) What are some of the verbal clues to deception? Answer: Changes in speech patterns. Repetition of the […]

1) An employee intercepts a legitimate check made payable to a vendor and changes the payee name to his name. This is an example of a forged maker. 2) A pass-through scheme requires the use of a legitimate vendor. Answer: […]

1) What is the role of the external auditor in the financial reporting process? 2) Reviewing cash receipts before, during, and after an individuals employment is a form of invigilation. Answer: T 3) Collusion is almost impossible to detect because […]

1) If a check is made payable to cash, detection of the fraudster is made more difficult. 2) The element of proximate cause for negligence means the plaintiff must establish that damages resulted from the defendants breach of duty. Answer: […]

1) The Forensic and Valuation Services (FVS) Center is part of the American Institute of Certified Public Accountants. 2) What are the considerations related to forecasting income and cash flows? Answer: At a minimum, data should be considered in the […]

1) In very few cases will a company fall under the purview of more than one set of regulations or taxing authorities influences. 2) Provide an example of the following: Bank analysis method: Answer: A method of indirect income verification […]

1) How does the perception of detection impact fraud deterrence? 2) An employee who would probably not be involved in skimming would be: I.The president of the company J.The cashier K.The accounts receivable manager L.The petty cash clerk Answer: A […]

1) Which is NOT a measure to reduce the opportunity to commit financial statement fraud? Q.Maintain accurate and complete internal accounting records R.Maintain a security guard at each company location S.Divide important functions among employees, sharing control of one area […]

1) List five assertions of management in respect to financial statements. 2) Line employees are the principle perpetrators in approximately 39 percent of schemes, yielding company losses of approximately $150,000. Answer: F 3) Which of the following is NOT a […]

1) The Fraud Triangle consists of: motive, opportunity, and rationalization. 2) In what types of cases may a forensic accountant serve as an expert witness? Answer: Although consultants are not expected to testify, it is common for the attorney to […]

1) Larceny of receivable is generally not concealed through which method? I.Force balancing J.Reversing entries K.Destruction of records L.Including phone checks in the bank deposits 2) For purposes of defining occupational fraud and abuse, employees include only top or middle […]

1) Shell companies require collusion amongst employees in order to be successful. 2) Under generally accepted auditing standards (GAAS) auditors are not currently responsible for planning and performing auditing procedures to detect immaterial misstatements, regardless of whether they are caused […]

1) A married couple goes to a movie. During the movie, the husband strangles the wife. He is able to get her body home without attracting attention. How is this possible? 2) Explain fraud examination. Answer: Fraud examination involves obtaining […]

1) What are the two categories of data mining and knowledge discovery software? 2) Ghost employees are employees that physically exist but are not on the payroll records. Answer: F 3) What are the various categories and calculations used in […]

1) Predication is required before civil charges can be filed. 2) The statement is frequently made that the financial statements are not misleading and are free of material errors, irregularities, and fraud. What does this statement mean? Answer: The financial […]

1) What is the discovery process and how does it work? 2) Evidence is defined as all that is admitted to the court. Answer: F 3) Some of the methods that can be used to develop estimates of lost sales […]

1) What is meant by a conflict of interest? 2) According to Albrecht, opportunities to commit fraud may be created by individuals, or by deficient or missing internal controls. Answer: T 3) Financial statement analysis includes all of the following […]

1) A major difference between auditors and fraud examiners is that most auditors match documents to numbers to see whether support exists and is adequate, whereas fraud examiners determine whether the documents are real or fraudulent.. 2) Service employees that […]