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Saint Louis ACC 505 Week 6 Quiz Latest

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Saint Louis ACC 505 Week 6 Quiz Latest

Saint Louis ACC 505 Week 6 Quiz Latest

ACC505

Saint Louis ACC 505 Week 6 Quiz Latest

Saint Louis ACC 505 Week 6 Quiz Latest

Question 1 Under Sarbanes-Oxley, chief executive officers and chief financial officers are required to personally certify annual and quarterly SEC filings. Which of the following is an item that they must certify in their reports?

All of the above.

They have disclosed to the audit committee any material control weakness.

The financial statements were prepared in conformity with GAAP.

The company’s internal controls have prevented or detected all material instances of fraud during the last year.

Question 2 Walden Industries is being sued by a former employee for wrongful termination. It is probable that the company will lose the case and be ordered to pay the plaintiff a significant sum of money. If Walden fails to report this information somewhere in its financial statements, it is violating the GAAP concept of:

cost-benefit.

materiality.

full disclosure.

matching.

Question 3 Investigating registered public accounting firms and their employees, conducting disciplinary hearings, and imposing sanctions where justified are duties of which of the following bodies?

General Accounting Office’s Oversight Board

AICPA’s Accounting Standards Board

SEC’s Subcommittee on Corporate Governance

Public Company Accounting Oversight Board

Question 4 Senior management is most likely to understate business performance in the financial statements for which of the following reasons?

To reduce the value of an owner-managed business for purposes of a divorce settlement

To increase the value of a corporate unit whose management is planning a buyout

To comply with loan covenants

To trigger performance-related compensation or earn-out payments

Question 5 Fraudulent manipulation of the going concern assumption usually results from an organization trying to conceal its terminal business situation.

True

False

Question 6 Which of the following is a duty of the Public Company Accounting Oversight Board?

Registering accounting firms that audit publicly traded companies

All of the above

Establishing or adopting standards relating to audits of publicly traded companies

Enforcing compliance with professional standards and securities laws relating to public company audits

Question 7 Intentionally reporting product sales in the financial statements for the period prior to when they actually occurred is a violation of which generally accepted accounting principle?

Periodicity

Historical cost

Matching

Revenue recognition

Question 8 When a fraudster feeds fictitious information into the accounting system in order to manipulate reported results, this is called:

going outside the accounting system.

beating the accounting system.

playing the accounting system.

boing around the accounting system.

Question 9 The Sarbanes-Oxley Act provides that members of the audit committee may receive compensation for consulting or advisory work only if approved by a majority of the board members.

True

False

Question 10 The term “financial statement” does not include a statement of cash receipts and disbursements, because this type of presentation violates the required use of accrual accounting under GAAP.

True

False

Question 11 According to COSO’s study, Fraudulent Financial Reporting: 1998-2007, which of the following is the most likely to commit financial statement fraud?

Organized criminals

Lower-level employees

Mid-level employees

The chief executive officer and/or chief financial officer

Question 12 Which of the following is a reason that a chief executive officer might commit financial statement fraud?

To conceal the company’s true performance

To receive or increase a performance bonus

All of the above

To avoid termination due to poor performance

Question 13 Which of the following is not one of the provisions established under the Sarbanes-Oxley Act?

Code of ethics for senior financial officers

Criminal penalties for altering documents

Management assessments of internal controls

The creation of the Public Accounting Standards Board

Question 14 A company’s financial statements are the responsibility of:

the accounting department.

management.

the shareholders.

the independent auditors.

Question 15 The preferred and easiest method of concealing liabilities and expenses is to simply fail to record them.

True

False

Question 16 Which of the following is a red flag associated with fictitious revenues?

An unusual decline in the number of days’ purchases in accounts payable

Recurring losses while reporting increasing cash flows from operations

An unusual decrease in gross margin

Several unusual and highly complex sales transactions recorded close to the period end

Question 17 While conducting the annual audit of Bluebird Company’s financial statements, Elsie Finnegan, CFE, CPA, came across some fishy findings. The company recorded several large and unusual sales at the end of the fiscal year to customers Elsie had never heard of. Further, all of these sales occurred within the company’s specialty division, which had previously been in danger of closing due to recurring losses. Based on these findings, what type of financial statement fraud is likely occurring?

Expense omission

All of the above

Unrecorded warranties

Fictitious revenues

Question 18 Staff Accounting Bulletin Topic 13, “Revenue Recognition,” indicates that revenue is considered realized or realizable and earned when four criteria are met. Which of the following is one of these criteria?

All of the above.

Collectability is reasonably assured.

Goods have been scheduled to be delivered or services have been scheduled to be rendered within the current fiscal period.

The seller has located alternate buyers.

Question 19 Capitalizing revenue-based expenses as depreciable assets will cause income to be ____________ in the current period and _______________ in future periods.

overstated; overstated

understated; overstated

understated; understated

overstated; understated

Question 20 Which of the following is not an example of financial statement fraud?

Deliberate omission of material disclosures

All of the above are examples of financial statement fraud

Falsification of material financial records, supporting documents, or business transactions

Unintentional misapplication of accounting principles

Question 21 Recurring attempts by management to justify marginal or inappropriate accounting treatments on the basis of materiality is a red flag associated with which type of financial statement fraud?

Improper disclosures

Fictitious revenues

None of the above

Concealed liabilities

Question 22 The civil and criminal protections for whistleblowers under Sarbanes-Oxley apply only to employees of publicly traded companies.

True

False

Question 23 Sharpe Medical Supply, Inc. has suffered a recent slow-down in sales and is in danger of showing a loss for the 20X1 fiscal year. To boost income, the sales manager encourages two of the company’s largest customers to overbuy several slow-moving products at deep discounts. He also offers them extended payment terms, some of which delay payment until the end of 20X2. This is an example of what type of scheme?

Channel stuffing

Long-term contracts

Discount extension

Sales re-routing

Question 24 An organization that seeks to fraudulently minimize its net income due to tax considerations may do so by:

recording fictitious revenues.

omitting existing liabilities.

underestimating warranty repairs expense.

expensing capitalized expenditures.

Question 25 According to the 2012 Report to the Nations on Occupational Fraud and Abuse, the most common type of occupational fraud is financial statement fraud.

True

False

Question 26 Which of the following is a red flag associated with concealed liabilities and expenses?

An unusual increase in the number of days’ purchases in accounts payable

An unusual change in the relationship between fixed assets and depreciation

Gross margin significantly lower than industry average

Significant reductions in accounts payable while competitors are stretching out payments to vendors

Question 27 An inability to generate cash flows from operations while reporting earnings and earnings growth is a red flag for which of the following financial statement fraud schemes?

Improper asset valuation

Fictitious revenues

All of the above

Concealed liabilities and expenses

Question 28 In one of the cases in the textbook, Eddie Antar, the CEO of the Crazy Eddie electronic stores in the New Jersey area, took fraud to a higher level. The company started out as a small, family-owned business, but Eddie soon found that he could really clean up by taking his company public and making a fortune off the sale of stock. However, in order to sustain his financial success, he turned to cooking the books. Unfortunately for Eddie, his scheme eventually came to an end. What financial statement fraud scheme did Eddie commit?

Overstatement of inventory

Improper disclosures

All of the above

Fictitious revenues

Question 29 In one of the cases in the textbook, Eddie Antar, the CEO of the Crazy Eddie electronic stores in the New Jersey area, took fraud to a higher level. The company started out as a small, family-owned business, but Eddie soon found that he could really clean up by taking his company public and making a fortune off the sale of stock. However, in order to sustain his financial success, he turned to cooking the books. Unfortunately for Eddie, his scheme eventually came to an end. How was the fraud caught?

His ex-wife contacted the SEC.

The audit committee received an anonymous tip which led them to the fraud.

Eddie lost a proxy battle for ownership, and the company’s new owners quickly discovered the fraud as they reviewed the books.

The auditors found that the inventory count had been changed.

Question 30 In one of the cases in the textbook, Michael Weinstein was the head of Coated Sales, Inc., a company that coated fabrics for use in producing things like parachutes, helmet liners, and camouflage suits. By engaging in financial shenanigans, Coated Sales moved to the top of its industry, but ultimately the good times turned into bad times, and the company declared bankruptcy. Which of the following was a red flag that a fraud was being perpetrated?

The bank account had been overdrawn on at least four occasions in one year.

A single check was used to pay off several different customer accounts.

The company kept changing auditors every other year.

The company experienced extremely rapid growth even while its competitors’ growth was flat.

Question 31 In the vertical analysis of an income statement, _____________ is assigned 100 percent, with all other items expressed as a percentage thereof.

Net sales

Net income

Gross sales

Gross margin

Question 32 Promoting strong values, based on integrity, throughout the organization can help reduce financial statement fraud by addressing which side of the fraud triangle?

Pressure to commit fraud

Rationalization of fraud

Opportunity to commit fraud

Non-sharable financial needs

Question 33 In one of the cases in the textbook, Michael Weinstein was the head of Coated Sales, Inc., a company that coated fabrics for use in producing things like parachutes, helmet liners, and camouflage suits. By engaging in financial shenanigans, Coated Sales moved to the top of its industry, but ultimately the good times turned into bad times, and the company declared bankruptcy. What type of financial statement fraud was committed?

Fictitious assets

Concealed expenses

Improper disclosures

Fictitious sales

Question 34 Which of the following is a common target for improper asset valuation schemes?

Business combinations

All of the above

Inventory valuation

Accounts receivable

Question 35 The technique for analyzing the percentage change in individual financial statement items from one accounting period to the next is known as:

vertical analysis.

horizontal analysis.

correlation analysis.

ratio analysis.

Question 36 Bill Raymond is the CEO of the Drummond Group, a consulting group in the Carolinas. Sales have increased at least five percent every year for the past seven years. Unfortunately, the company has hit a slump this year, and revenue is far less than anticipated. However, in order to receive his performance bonus, Bill must show a sales increase of at least seven percent. When the financials are released, sales have increased by exactly seven percent. Which of the following ratio analyses would be most helpful in revealing that Bill included bogus sales in the company’s financials?

Quick ratio

Inventory turnover

Debt-to-equity ratio

Receivable turnover

Question 37 An unusual change in the relationship between fixed assets and depreciation is a red flag associated with which type of financial statement fraud scheme?

Timing differences

All of the above

Improper asset valuation

Improper disclosure

Question 38 Scott Ruskin is the CEO of Decatur Materials. The company has been struggling for the last few years and is in danger of defaulting on several of its bank loan covenants. Scott is facing significant pressure from the board of directors to turn the company around. Unless he meets all of the financial goals for the year, he will be out the door without a golden parachute. To improve the financial appearance of the company, Scott undertakes a scheme to boost the balance sheet by faking inventory. The analysis of what financial ratio would most likely bring this scheme to light?

Profit margin

Inventory turnover

Quick ratio

Collection ratio

Question 39 According to SAS 99 (AU240), the auditor should ask management about the risks of fraud and how they are addressed. Which of the following is not described as an issue that the auditor should ask management about?

Whether and how management communicates the company’s financial results to its employees

Management’s understanding of the risk of fraud

Whether management has knowledge of fraud or suspected fraud

Programs that the entity has established to prevent, deter, or detect fraud

Question 40 According to SAS 99 (AU240), fraud involving senior management should be reported directly to the shareholders as soon as the fraud is documented.

True

False

 

Saint Louis ACC 505 Week 6 Quiz Latest

Saint Louis ACC 505 Week 6 Quiz Latest

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