Revenue- And Inventory-related Financial Statement Frauds
This question bank verified by Studydeets
Questions Bank
- The Nature of FraudWhy People Commit FraudFighting Fraud: An OverviewPreventing FraudRecognizing the Symptoms of FraudData-Driven Fraud DetectionInvestigating Theft ActsInvestigating ConcealmentConversion Investigation MethodsInquiry Methods and Fraud ReportsFinancial Statement FraudRevenue- and Inventory-Related Financial Statement FraudsLiability, Asset, and Inadequate Disclosure FraudsFraud Against OrganizationsConsumer FraudBankruptcy, Divorce, and Tax FraudFraud in E-CommerceLegal Follow-Up
Question 1
Free
Multiple Choice
Revenue-related financial statement fraud is prevalent for all of the following reasons except:
Choose correct answer/s
There are numerous accounting methods for recognizing revenue.
Revenue-recognition policies are unlikely to be reviewed by financial statement auditors.
Net income can be easily manipulated by using revenue accounts.
Judgment can significantly affect the amount of revenue recognized by an entity.
Check answer
Question 2
Free
Multiple Choice
The practice of ____________ involves selling unused assets while promising to buy them back at roughly the same price
Choose correct answer/s
Improper cutoff
Refreshing transactions
Channel stuffing
Round-tripping
None of the above
Check answer
Question 3
Free
Multiple Choice
Which of the following is not a fraud scheme affecting the revenue accounts?
Choose correct answer/s
Related-party transactions
Side agreements
Double counting
Lapping
Check answer
Question 4
Free
Multiple Choice
Which of the following are not revenue-related fraud symptoms?
Choose correct answer/s
Analytical symptoms
Lifestyle symptoms
Control symptoms
Tips and complaints
All of the above are revenue-related fraud symptoms
Check answer
Question 5
Free
Multiple Choice
Which of the following is not a typical analytical symptom of revenue fraud?
Choose correct answer/s
Revenue appears too high
Discounts appear too low
Allowance for doubtful accounts appears too high
Bad debt expense appears too low
All of the above are typical analytical symptoms of revenue fraud
Check answer
Question 6
Multiple Choice
Which of the following is not a typical behavioral or verbal symptom of revenue fraud?
Choose correct answer/s
Inconsistent or vague responses from management arising from revenue inquiries
Denied access to facilities, employees, or records related to revenue-related audit evidence
Unusual delays by the entity in providing revenue-related information
Untrue responses by management to queries about revenue-related accounts
All of the above are typical symptoms
To unlock the question
Question 7
Multiple Choice
Which of the following are ways to proactively search for fraud symptoms?
Choose correct answer/s
Responding to customer complaints regarding sales terms.
Investigating anomalies noticed when sampling transactions for routine control testing.
Exploring claims of a disgruntled employee that were received in an exit interview.
None of the above.
To unlock the question
Question 8
Multiple Choice
Common ways of performing "within-statement" analysis include all of the following except:
Choose correct answer/s
Comparing a firm's account balances from period to period
Comparing relationships between account balances from period to period
Comparing financial results with industry averages from period to period
All of the above are common ways of performing "within-statement" analysis
To unlock the question
Question 9
Multiple Choice
__________ involves examining percentage changes in account balances from period to period.
Choose correct answer/s
Horizontal analysis
Change statement analysis
Ratio analysis
None of the above
To unlock the question
Question 10
Multiple Choice
Horizontal analysis is not typically performed on the ___________ .
Choose correct answer/s
Balance sheet
Income statement
Statement of cash flows
None of the above
To unlock the question
Question 11
Multiple Choice
Which of the following ratios is not commonly used to discover revenue-related analytical fraud symptoms?
Choose correct answer/s
Asset turnover ratio
Earnings per share
Gross profit ratio
Accounts receivable turnover
All of the above are commonly used to discover revenue-related analytical fraud symptoms
To unlock the question
Question 12
Multiple Choice
Which of the following is false concerning "topside" journal entries used to commit financial statement fraud?
Choose correct answer/s
Upper management usually records the journal entry
Entries are recorded directly to the subsidiary ledger
The journal entry may be recorded after normal business hours.
All of the above are false
To unlock the question
Question 13
Multiple Choice
Under SAS 99, financial statement auditors are required to make inquires of all of the following individuals or groups about possible fraudulent activity or red flags except:
Choose correct answer/s
Management
Audit committee members
Internal audit personnel
Financial statement auditors must make inquiries of all of the above
To unlock the question
Question 14
Multiple Choice
Potential whistle-blowers are hesitant to come forward with information for all of the following reasons except:
Choose correct answer/s
They don't know who to tell
They don't feel it's their responsibility
They don't want to wrongly accuse someone
They are afraid of "whistle-blower" repercussions
To unlock the question
Question 15
Multiple Choice
Which of the following is not a common inventory-related fraud scheme?
Choose correct answer/s
Capitalizing costs that should be expensed
Cutoff problems
Consigned inventory
All of the above are inventory-related fraud schemes
To unlock the question
Question 16
Multiple Choice
Auditors realize that XYZ is experiencing increasing levels of inventory while its competitors' inventory levels remain stable. All of the following are likely explanations except:
Choose correct answer/s
The increase in inventory is a result of poor management decisions
The increase in inventory is a result of increased sales expectations
The increase in inventory is a result of fraud
All of the above are possible explanations
To unlock the question
Question 17
Multiple Choice
Which of the following is not a typical symptom of revenue fraud?
Choose correct answer/s
managers and other company officers are living a lavish lifestyle
management overrides significant internal control activities related to the revenue cycle
revenue-related ledgers do not balance
the company has numerous large customers
To unlock the question
Question 18
Multiple Choice
Which of the following is most likely to be indicative of a potential revenue fraud?
Choose correct answer/s
a sudden increase in the sales discount percentage
a high sales return percentage
a rapidly increasing asset turnover ratio
a rapidly decreasing working capital turnover ratio
To unlock the question
Question 19
Multiple Choice
According to the text, what is the unique reason that the accounts receivable turnover ratio is so widely used in analyzing revenue?
Choose correct answer/s
significant revenues and receivables will almost always affect this ratio
it is easy to compute
the data is readily available
the accounts receivable turnover ratio is not a widely used ratio in analyzing revenue
To unlock the question
Question 20
Multiple Choice
When analyzing ratios, what is typically the most important aspect to evaluate?
Choose correct answer/s
the size of the ratio
the direction of the ratio
the change in the ratio
the complexity of the ratio
To unlock the question