WGU D551 C254 FRAUD AND FORENSIC
ACCOUNTING COMPREHENSIVE EXAM
STUDY GUIDE WITH COMPLETE
SOLUTIONS
●● Why is it unethical for a supervisor to ask an accountant to capitalize
the marketing research program?
A. this action overstates assets
B. this action overstates expenses
C. this action understates liabilities
D. this action understates net income
Answer: A
●● How can financial statement fraud impact stakeholders?
A. investors may experience lower interest rates
B. fraud can be an embarrassment to the audit profession
C. investors may be more willing to purchase new stock issues
D. fraud can lead to stock options decreasingly being used for executive
compensation
Answer: B
,●● How do fraudulent financial statements impact stakeholders and the
markets?
A. financial statement fraud leads to embezzlement
B. interest rates rise as a result of financial statement fraud
C. financial statement fraud leads investors to lose confidence
D. CEOs acquire additional company stock following financial
statement fraud
Answer: C
●● What is a consequence of financial statement fraud?
A. the organization shows losses due to embezzlement
B. red flags prove that fraud occurred in the organization
C. suppliers are able to take advantage of the organization
D. the organization appears more profitable than it actually is
Answer: D
●● What are two potential consequences a company accused of financial
statement fraud can face?
A. the CEO might be indicted and convicted
B. the SEC might relist and refinance the company
C. company stock price might decline when news of fraud reaches the
press
, D. the company may be required to issue new stock to provide needed
funds
Answer: A and C
●● What is motivation behind committing fraud through backdating of
stock options?
A. giving bonuses to employees
B. increasing executive compensation
C. ensuring a successful stock issuance
D. preventing a violation of debt covenants
Answer: B
●● What is a common motivator of financial statement fraud?
A. greed
B. intelligence
C. health issues
D. sense of entitlement
Answer: A
●● What is the most common method used to commit financial
statement fraud, according to the COSO study?
A. capitalizing expenses
B. overstating existing assets
ACCOUNTING COMPREHENSIVE EXAM
STUDY GUIDE WITH COMPLETE
SOLUTIONS
●● Why is it unethical for a supervisor to ask an accountant to capitalize
the marketing research program?
A. this action overstates assets
B. this action overstates expenses
C. this action understates liabilities
D. this action understates net income
Answer: A
●● How can financial statement fraud impact stakeholders?
A. investors may experience lower interest rates
B. fraud can be an embarrassment to the audit profession
C. investors may be more willing to purchase new stock issues
D. fraud can lead to stock options decreasingly being used for executive
compensation
Answer: B
,●● How do fraudulent financial statements impact stakeholders and the
markets?
A. financial statement fraud leads to embezzlement
B. interest rates rise as a result of financial statement fraud
C. financial statement fraud leads investors to lose confidence
D. CEOs acquire additional company stock following financial
statement fraud
Answer: C
●● What is a consequence of financial statement fraud?
A. the organization shows losses due to embezzlement
B. red flags prove that fraud occurred in the organization
C. suppliers are able to take advantage of the organization
D. the organization appears more profitable than it actually is
Answer: D
●● What are two potential consequences a company accused of financial
statement fraud can face?
A. the CEO might be indicted and convicted
B. the SEC might relist and refinance the company
C. company stock price might decline when news of fraud reaches the
press
, D. the company may be required to issue new stock to provide needed
funds
Answer: A and C
●● What is motivation behind committing fraud through backdating of
stock options?
A. giving bonuses to employees
B. increasing executive compensation
C. ensuring a successful stock issuance
D. preventing a violation of debt covenants
Answer: B
●● What is a common motivator of financial statement fraud?
A. greed
B. intelligence
C. health issues
D. sense of entitlement
Answer: A
●● What is the most common method used to commit financial
statement fraud, according to the COSO study?
A. capitalizing expenses
B. overstating existing assets
