ACTG 313 UPDATED EXAM TEST PAPER QUESTIONS AND
SOLUTIONS GUARANTEE A+
✔✔5-1.5 According to the text, which type of threat represents the greatest risk to
information systems and causes the greatest dollar losses?
a)Natural and political disasters
b)Unintentional acts
c)Intentional acts
d)Software errors and equipment failures - ✔✔b
✔✔a)A material fact that induces a person to act
b)An intent to do bodily harm to the victim
c)An injury or loss suffered by the perpetrator
d)A justifiable reliance, where a person relies on a misrepresentation to take an action
e)A false statement, representation, or disclosure - ✔✔a,d,e
✔✔5-2.2 Which of the following statements are true? (Check all that apply.)
a)Small businesses are less vulnerable to fraud than large companies because small
companies typically have more effective internal controls than larger companies.
b)Fraud perpetrators are often referred to as blue-collar criminals.
c)A typical organization loses 5% of its annual revenue to fraud, indicating yearly global
fraud losses of over $3.7 trillion.
d)Most fraud perpetrators are knowledgeable insiders with the requisite access, skills,
and resources.
e)The controls used to protect corporate assets make it more difficult for an outsider to
steal from a company. - ✔✔c,d,e
✔✔5-2.3 Which of the following statements are true? (Check all that apply.)
a)Fraudulent financial reporting is intentional or reckless conduct that results in
materially misleading financial statements.
b)Misappropriation of assets is the theft of company assets by employees.
c)Corruption is misrepresenting or leaving out facts in order to promote an investment
that promises fantastic profits with little or no risk.
d)Investment fraud is dishonest conduct, such as bribery and bid rigging, by those in
power that often involves illegitimate or immoral actions. - ✔✔a,b
✔✔5-2.4 Which of the following statements are true with respect to asset
misappropriation? (Check all that apply.)
a)A significant contributor to most misappropriations is the absence of internal controls
and/or the failure to enforce existing internal controls.
b)Rarely do fraud perpetrators adopt a more lavish lifestyle that requires even greater
amounts of money.
c)The sheer magnitude of some frauds leads to their detection.
d)Since few perpetrators voluntarily stop their frauds, there are no small frauds—only
large ones that are detected early.
, e)Few misappropriation frauds are self-perpetuating; that is, they do not require the
perpetrator to continue the fraud scheme to avoid detection. - ✔✔a,c,d
✔✔5-2.5 Which of the following statements are true with respect to fraudulent financial
reporting? (Check all that apply.)
a)Management falsifies financial statements in order to deceive investors and creditors,
increase a company's stock price, meet cash flow needs, or hide company losses and
problems.
b)Auditors and management are just as concerned with misappropriations as they are
with fraudulent financial reporting.
c)The ACFE found that fraudulent financial reporting is as much as 17 times more likely
than asset misappropriation.
d)Frequent "cook the books" schemes involve fictitiously inflating revenues, recognizing
revenues before they are earned, delaying expenses to a later period, overstating
inventories, and concealing liabilities. - ✔✔a,d
✔✔-3.1 Which of the following statements are true about fraud perpetrators? (Check all
that apply.)
a)Researchers found significant psychological and demographic differences between
violent and white-collar criminals.
b)Most white-collar criminals have a previous criminal record; and they were honest and
respected members of their community.
c)Most first-time, unprosecuted fraud perpetrators never commit another fraud.
d)Researchers found few psychological and demographic differences between white-
collar criminals and the public. - ✔✔a,d
✔✔5-3.2 For most first-time fraud perpetrators, three conditions are present when fraud
occurs. These include: (Check all that apply.)
a)A pressure, incentive, or motivation
b)The inability to distinguish between right and wrong
c)A criminal mindset
d)An opportunity
e)A rationalization that allows a perpetrator to justify the illegal behavior - ✔✔a,d,e
✔✔5-3.3 Which of the following classification of pressures motivate people to perpetrate
employee fraud? (Check all that apply.)
a)Industry pressures and conditions
b)Lifestyle pressures
c)Management characteristics and pressures
d)Emotional pressures
e)Financial pressures - ✔✔b,d,e
✔✔5-3.4 Opportunity is the condition or situation that allows a perpetrator to: (Check all
that apply.)
a)Commit the fraud
SOLUTIONS GUARANTEE A+
✔✔5-1.5 According to the text, which type of threat represents the greatest risk to
information systems and causes the greatest dollar losses?
a)Natural and political disasters
b)Unintentional acts
c)Intentional acts
d)Software errors and equipment failures - ✔✔b
✔✔a)A material fact that induces a person to act
b)An intent to do bodily harm to the victim
c)An injury or loss suffered by the perpetrator
d)A justifiable reliance, where a person relies on a misrepresentation to take an action
e)A false statement, representation, or disclosure - ✔✔a,d,e
✔✔5-2.2 Which of the following statements are true? (Check all that apply.)
a)Small businesses are less vulnerable to fraud than large companies because small
companies typically have more effective internal controls than larger companies.
b)Fraud perpetrators are often referred to as blue-collar criminals.
c)A typical organization loses 5% of its annual revenue to fraud, indicating yearly global
fraud losses of over $3.7 trillion.
d)Most fraud perpetrators are knowledgeable insiders with the requisite access, skills,
and resources.
e)The controls used to protect corporate assets make it more difficult for an outsider to
steal from a company. - ✔✔c,d,e
✔✔5-2.3 Which of the following statements are true? (Check all that apply.)
a)Fraudulent financial reporting is intentional or reckless conduct that results in
materially misleading financial statements.
b)Misappropriation of assets is the theft of company assets by employees.
c)Corruption is misrepresenting or leaving out facts in order to promote an investment
that promises fantastic profits with little or no risk.
d)Investment fraud is dishonest conduct, such as bribery and bid rigging, by those in
power that often involves illegitimate or immoral actions. - ✔✔a,b
✔✔5-2.4 Which of the following statements are true with respect to asset
misappropriation? (Check all that apply.)
a)A significant contributor to most misappropriations is the absence of internal controls
and/or the failure to enforce existing internal controls.
b)Rarely do fraud perpetrators adopt a more lavish lifestyle that requires even greater
amounts of money.
c)The sheer magnitude of some frauds leads to their detection.
d)Since few perpetrators voluntarily stop their frauds, there are no small frauds—only
large ones that are detected early.
, e)Few misappropriation frauds are self-perpetuating; that is, they do not require the
perpetrator to continue the fraud scheme to avoid detection. - ✔✔a,c,d
✔✔5-2.5 Which of the following statements are true with respect to fraudulent financial
reporting? (Check all that apply.)
a)Management falsifies financial statements in order to deceive investors and creditors,
increase a company's stock price, meet cash flow needs, or hide company losses and
problems.
b)Auditors and management are just as concerned with misappropriations as they are
with fraudulent financial reporting.
c)The ACFE found that fraudulent financial reporting is as much as 17 times more likely
than asset misappropriation.
d)Frequent "cook the books" schemes involve fictitiously inflating revenues, recognizing
revenues before they are earned, delaying expenses to a later period, overstating
inventories, and concealing liabilities. - ✔✔a,d
✔✔-3.1 Which of the following statements are true about fraud perpetrators? (Check all
that apply.)
a)Researchers found significant psychological and demographic differences between
violent and white-collar criminals.
b)Most white-collar criminals have a previous criminal record; and they were honest and
respected members of their community.
c)Most first-time, unprosecuted fraud perpetrators never commit another fraud.
d)Researchers found few psychological and demographic differences between white-
collar criminals and the public. - ✔✔a,d
✔✔5-3.2 For most first-time fraud perpetrators, three conditions are present when fraud
occurs. These include: (Check all that apply.)
a)A pressure, incentive, or motivation
b)The inability to distinguish between right and wrong
c)A criminal mindset
d)An opportunity
e)A rationalization that allows a perpetrator to justify the illegal behavior - ✔✔a,d,e
✔✔5-3.3 Which of the following classification of pressures motivate people to perpetrate
employee fraud? (Check all that apply.)
a)Industry pressures and conditions
b)Lifestyle pressures
c)Management characteristics and pressures
d)Emotional pressures
e)Financial pressures - ✔✔b,d,e
✔✔5-3.4 Opportunity is the condition or situation that allows a perpetrator to: (Check all
that apply.)
a)Commit the fraud
