ACCT 562 Week 4 Midterm Exam



Product Description

ACCT 562 Week 4 Midterm Exam

ACCT 562 Week 4 Midterm Exam


ACCT 562 Week 4 Midterm Exam

Page: 1
1. Question: (TCO D) The review team should be aware of various management and operational techniques, which includes all of the following except:

1.    Mental Models

2.    Spirituality

3.    Green fielding

2. Question: (TCO F) Manually altering entries in an organization‘s books in order to conceal fraud is called:

1.    Shrinkage

2.    Forced reconciliation

3.    Padding the books


3. Question: (TCO F) During an interview, when an interviewee repeatedly fiddles
with a pen or picks lint from her clothing, he/she is giving non­verbal clues called:

1.    Signals

2.    Manipulators

3.    Exemplifiers


4. Question: (TCO F) When the subject of an investigation has been accused of misconduct, establishing a morally acceptable rationalization might allow the accused to reconcile his actions with his conscience. Which of the following is not an example of an acceptable rationalization?

1.    The accused felt that he needed to get back at someone in the organization.

2.    The accused engaged in the misconduct for the benefit of others.

3.    The accused has personal demons that can’t be overcome.

5. Question: (TCO F) In one of the case studies in the Wells textbook (page 49),

Brian Lee, a top­notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. What was his motivation for committing the fraud?

1.    Repay his students loans.

2.    Fund his charitable doctor work.

3.    None of the above

6. Question: (TCO F) Nicolette Garrison works part-time at an independent record store. Whenever her friend, Jacob Barker, comes into the store during one of her shifts, he picks up a CD and brings it to the register where Nicolette is stationed. After ringing a no sale transaction on the cash register, Nicolette pretends to swipe Jacob’s credit card for payment.
She puts the CD in a bag and gives it to Jacob, who walks out without actually paying for the merchandise. What kind of scheme is being committed?

1.    False refund

2.    Sales skimming

3.    Cash larceny

7. Question: (TCO F) Which of the following is not a method used to conceal false shipments of inventory?

1.    Falsely increasing the perpetual inventory

2.    Writing off the inventory as scrap

3.    Physical padding

8. Question : (TCO F) According to the 2009 Global Fraud Survey, the theft of which type of non­cash asset was the least common but caused the highest median loss?

1.    Proprietary information

2.    Securities

3.    Inventory

9. Question: (TCO A) Benefits derived from operational reviews include

1.    assessing management information systems

2.    locating opportunities to increase revenue

3.    All of the above

10. Question: (TCO B) Financial ratios used in planning include:

1.    Performance

2.    Profitability

3.    All of the above

11. Question: (TCO A­D) Creating staff assignment, budgets, specific audit steps is part of the _____ phase.

1.    Planning

2.    Work program

3.    Reporting

12. Question: (TCO A) Operational areas eligible for review include:


1.    depreciation processes

2.    inventory­raw material and finished goods

3.    database access

13. Question: (TCO F) Richard Moore is the controller for Ajax Company. Recently, he has suffered several large losses at the race track, causing him to incur enormous personal debts. Which type of non-sharable financial problem best describes Richard’s situation?

1.    Physical isolation

2.    Violation of ascribed obligations

3.    Status gaining

14. Question: (TCO F) Research in the Hollinger Clark study suggests that the best way to deter employee theft is by:


1.    Increasing the perception of detection

2.    Strengthening internal controls

3.    Communicating the organization s fraud policies to employees


15. Question: (TCO F) Which of the following is not part of the fraud theory approach?


1.    Develop what ­if scenarios.

2.    Identify who committed the fraud.


16. Question: (TCO F) The technique for analyzing the percentage change in individual financial statement items from one accounting period to the next is known as:


1.    Horizontal analysis

2.    Vertical analysis

3.    None of the above

17. Question: (TCO F) In the Fraud Tree, asset misappropriations are broken down into cash and non­cash schemes. Which of the following is not considered a misappropriation of cash?


1.    Skimming

2.    Larceny

3.    Fraudulent Disbursement

18. Question: (TCO A) _____ and converting cash allow a business to survive.


1.    Debt management

2.    Employee satisfaction

3.    None of the above

19. Question: (TCO F) Which of the following is a method for concealing larceny of receivables?

1.    Reversing entries

2.    Lapping

3.    Skimming

20. Question: (TCO F) Jeff Lewis is an accounts receivable clerk for FTB Industries. As customers pay off their balances, Lewis posts the payments but pockets the money. He can conceal his theft by


1.    Adjusting the account with a discount

2.    Destroying the records

3.    All of the above

21. Question: (TCO F) Which of the following is a reason that a Chief Executive Officer might commit financial statement fraud?


1.    To avoid termination due to poor performance

2.    To conceal the company‘s true performance

3.    All of the above

22. Question: (TCO B) Information obtained during the course of planning includes:

1.    Previous auditor credentials who worked in this area.

2.    Information from Motley Fool message boards.

3.    None of the above.

Page: 2

1. Question: (TCO A) Operational review procedures embrace the concept of conducting
operations for economy, efficiency, and effectiveness. Provide a brief
description of the ECONOMY aspect, and provide an example.

2. Question: (TCO F) The 2010 Report to the Nations on Occupational Fraud and Abuse
covered a number of factors that are related to occupational fraud. List and
explain at least three of these factors.


3. Question:

(TCO F) Albrecht, in his research, developed the “fraud scale” and furnished a list of the reasons employees and executives commit occupational fraud. How are Albrecht’s conclusions similar to Cressey’s? How are they different?

4. Question: (TCO F) How can fictitious revenue be created through the use of false sales
to shell companies? Discuss the method and result of committing this fraud.