WGU D551|C254 Fraud and Forensic Accounting| PA and OA| Explore New 262 Actual Questions and Answers|2026 Update|100% Correct

WGU D551 r




WGU D551|C254 Fraud and Forensic Accounting| PA and OA|
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Explore New 262 Actual Questions and Answers|2026
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Update|100% Correct
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Testbankscove

,Question 1 r




What is a specific scheme to commit revenue recognition fraud?
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A. Record fictitious revenue r r




B. Improper use of merger resources r r r r




C. Failure to record asset impairments r r r r




D. Inappropriate application of purchase methods r r r r




Correct Answer: A (Record fictitious revenue)
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Rationale:
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Revenue recognition fraud often involves recording sales that never occurred. Fictitious
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r revenue directly inflates reported sales and net income. The other options relate to asset
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r misstatements or merger accounting, not specifically revenue fraud. r r r r r r r




Question 2 r




Which is the best example of effective inquiry of management?
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A. Are you familiar and do you fully understand the inventory controls associated
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r with your department?
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B. What internal control problems do you have in your department in relation to
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r inventory?
C. Are your inventory controls functioning properly?
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D. Do you regularly check and test your controls for deficiencies?
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Correct Answer: B (What internal control problems do you have in your department in
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relation to inventory?)
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Rationale:
Effective inquiry is open-ended and asks about actual problems rather than leading the
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r respondent to a yes/no answer. Option B invites management to disclose specific issues,
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r while the others are closed or leading questions.
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Question 3 r




Which of the following statements about detecting inadequate disclosure fraud is true?
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A. Missing disclosures are harder to detect than misleading disclosures.
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,B. The symptoms for detecting disclosure fraud are the same as for all other types
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r of fraud.
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C. Organizations involved in inadequate disclosure fraud often reveal too much
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r transparency in their footnote disclosures. r r r r




D. All of the above
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Correct Answer: A (Missing disclosures are harder to detect than misleading
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r disclosures)

Rationale:
Misleading disclosures can be observed because something is present but incorrect.
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r Missing disclosures are omissions, so there is nothing obvious to see. Options B and C are
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false – disclosure fraud symptoms differ, and fraudsters rarely reveal too much
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r transparency.




Question 4 r




Which part of the annual report is characterized as part of the public relations efforts of a
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r company?
A. The management's disclosure area of the report
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B. Management's discussion and analysis section of the report r r r r r r r




C. The strategic performance section of the report
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D. None of the above r r r




Correct Answer: B (Management's discussion and analysis section of the report)
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r Rationale:
MD&A allows management to explain results, future plans, and context – often serving a
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r public relations purpose. The other options are not standard annual report sections.
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Question 5 r




Which type of fraud scheme is typically hardest to detect?
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A. Fraud schemes involving property, plant and equipment
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B. Fraud schemes involving cash r r r

, C. Fraud schemes involving collusive behaviors with persons outside the company
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D. Fraud schemes that involve a single, large transaction
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Correct Answer: C (Fraud schemes involving collusive behaviors with persons outside
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r the company)
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Rationale:
Collusion involves multiple parties concealing fraud, making it very difficult for auditors to
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r uncover through normal testing. Outside parties (vendors, customers, etc.) are not
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r under the auditorʼs direct scrutiny.
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Question 6 r




Which scheme may indicate management fraud by the understatement of liabilities?
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A. Recording payable in a subsequent period r r r r r




B. Borrowing repurchase agreements r r




C. Borrowing from unrelated parties r r r




D. Recording deposits as unearned revenues r r r r




Correct Answer: A (Recording payable in a subsequent period)
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r Rationale:
Delaying the recording of a payable understates current liabilities. Options B and C do not
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r inherently understate liabilities; D correctly records a liability (unearned revenue) rather
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r than understating it.
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Question 7 r




Which type of footnote disclosure fraud is likely the most common?
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A. Failure to disclose all related parties
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B. Failure to disclose contingent liabilities
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C. Failure to disclose material related party transactions
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D. Failure to disclose important aspects of a company's operations
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Correct Answer: C (Failure to disclose material related party transactions)
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