Test Bank: Forensic and Investigative Accounting, 9th Edition
by D Larry Crumbley - Chapters 1-0, 9780808053224 |
Rationals Included
Which technique is considered to be an "off-book" fraud?
a. Skimming.
b. Unrecorded sales.
c. Understated sales.
d. Theft of incoming checks.
e. All of the above. - ANSWER: E
Building up balances in bank accounts based upon floating checks drawn against similar accounts in
other banks is best called:
a. Skimming.
b. Kiting.
c. Money laundering.
d. Lapping.
e. None of the above - ANSWER: B
What is a red flag of kiting?
a. Frequent deposits and checks in the same amount.
b. Large deposits on Fridays.
c. Short time lag between deposits and withdrawals.
d. Only a and c.
e. Items a, b, and c. - ANSWER: E
A person finds land, buys it, increases the price, and sells it to his company. What is this scheme?
a. A ghost scheme.
b. Land flip.
c. Ponzi scheme.
d. Bid rigging.
e. All of the above. - ANSWER: B
You should trace bank transfers for the latter part of an audit period and the early part of the
subsequent period to determine whether
a. The cash balances were overstated because of kiting.
b. The cash receipts journal was held open for a few days after the end of the year.
c. Any unusual payments to or receipts from related parties occurred.
d. The last checks recorded before the year-end were really mailed by year-end.
e. None of the above. - ANSWER: A
Kickbacks commonly occur in all of the following except:
a. Construction and property management companies.
b. Shipping department in which a customer pays an employee to ship a higher quality of goods than
ordered.
c. Purchasing agent in charge of awarding contracts.
d. Accounts receivable department records returns.
e. None of the above - ANSWER: D
Misappropriation of inventory may be detected by one of the following:
a. Analyzing the year-end bank reconciliation for outstanding checks.
b. Calculating and analyzing the gross profit margin.
c. Reconciling the accounts receivable subsidiary ledger to the general ledger.
, d. Increasing the integration of technology into the business process.
e. None of the above. - ANSWER: B Gross profit margin is a financial metric used to assess a
company's financial health and business model by revealing the proportion of money left over from
revenues after accounting for the cost of goods sold (COGS). Gross profit margin, also known as gross
margin, is calculated by dividing gross profit by revenues
Game theory and strategic reasoning concepts may be used to detect fraud by getting:
a. Auditors to engage in strategic reasoning by considering the types of fraud that management might
perpetrate and how these frauds might be concealed from the audit.
b. Auditors to gather new, unusual, or random audit evidence not easily anticipated by management.
c. Auditors to develop audit strategies that are unpredictable, especially with regard to the nature of
their evidence.
d. All of the above - ANSWER: D
Which statement is false?
a. Independence from a client is not required when a CPA performs litigation services without a
related attestation service.
b. Accountants are sometimes appointed by the court as a special master or court-appointed expert.
c. Independence is a factor used to determine whether a CPA performing litigation services has a
conflict of interest.
d. Any actual conflict of interest should be disclosed.
e. None of the above is false. - ANSWER: C
Which statement is true?
a. The Frye standard is used in federal courts.
b. The Daubert rule is not used in state courts.
c. The Frye standard may be used in some state courts.
d. North Carolina follows the Frye rule.
e. None of the above is true. - ANSWER: C
Which is not one of the Daubert factors?
a. Whether the theory existed before litigation began.
b. Whether the theory or technique in question can be and has been tested.
c. The theory's known or potential error rate.
d. The theory has attracted widespread acceptance.
e. All are Daubert factors - ANSWER: E
Which is not a Daubert factor?
a. Can the theory be or was the theory tested?
b. Was the theory subject to peer review?
c. There is general acceptance.
d. Known or potential rate of error of the method.
e. All of the above are Daubert factors. - ANSWER: E
Which item is not required in an expert's report?
a. List of cases that the expert has testified or been deposed in the past 10 years.
b. All opinions to be expressed.
c. The exhibits to be used.
d. List of all publications within the past 10 years.
e. All of the above. - ANSWER: A
Which statement about witness immunity is false?
a. A lawsuit against an expert for negligence is one type of tort action.
b. A negligence claim has a shorter statute of limitation than a breach of contract action.
c. A claim for breach of a contract generally is brought in a state court.
d. Communication made in a judicial proceeding carries an absolute privilege against civil suits for
damages.
by D Larry Crumbley - Chapters 1-0, 9780808053224 |
Rationals Included
Which technique is considered to be an "off-book" fraud?
a. Skimming.
b. Unrecorded sales.
c. Understated sales.
d. Theft of incoming checks.
e. All of the above. - ANSWER: E
Building up balances in bank accounts based upon floating checks drawn against similar accounts in
other banks is best called:
a. Skimming.
b. Kiting.
c. Money laundering.
d. Lapping.
e. None of the above - ANSWER: B
What is a red flag of kiting?
a. Frequent deposits and checks in the same amount.
b. Large deposits on Fridays.
c. Short time lag between deposits and withdrawals.
d. Only a and c.
e. Items a, b, and c. - ANSWER: E
A person finds land, buys it, increases the price, and sells it to his company. What is this scheme?
a. A ghost scheme.
b. Land flip.
c. Ponzi scheme.
d. Bid rigging.
e. All of the above. - ANSWER: B
You should trace bank transfers for the latter part of an audit period and the early part of the
subsequent period to determine whether
a. The cash balances were overstated because of kiting.
b. The cash receipts journal was held open for a few days after the end of the year.
c. Any unusual payments to or receipts from related parties occurred.
d. The last checks recorded before the year-end were really mailed by year-end.
e. None of the above. - ANSWER: A
Kickbacks commonly occur in all of the following except:
a. Construction and property management companies.
b. Shipping department in which a customer pays an employee to ship a higher quality of goods than
ordered.
c. Purchasing agent in charge of awarding contracts.
d. Accounts receivable department records returns.
e. None of the above - ANSWER: D
Misappropriation of inventory may be detected by one of the following:
a. Analyzing the year-end bank reconciliation for outstanding checks.
b. Calculating and analyzing the gross profit margin.
c. Reconciling the accounts receivable subsidiary ledger to the general ledger.
, d. Increasing the integration of technology into the business process.
e. None of the above. - ANSWER: B Gross profit margin is a financial metric used to assess a
company's financial health and business model by revealing the proportion of money left over from
revenues after accounting for the cost of goods sold (COGS). Gross profit margin, also known as gross
margin, is calculated by dividing gross profit by revenues
Game theory and strategic reasoning concepts may be used to detect fraud by getting:
a. Auditors to engage in strategic reasoning by considering the types of fraud that management might
perpetrate and how these frauds might be concealed from the audit.
b. Auditors to gather new, unusual, or random audit evidence not easily anticipated by management.
c. Auditors to develop audit strategies that are unpredictable, especially with regard to the nature of
their evidence.
d. All of the above - ANSWER: D
Which statement is false?
a. Independence from a client is not required when a CPA performs litigation services without a
related attestation service.
b. Accountants are sometimes appointed by the court as a special master or court-appointed expert.
c. Independence is a factor used to determine whether a CPA performing litigation services has a
conflict of interest.
d. Any actual conflict of interest should be disclosed.
e. None of the above is false. - ANSWER: C
Which statement is true?
a. The Frye standard is used in federal courts.
b. The Daubert rule is not used in state courts.
c. The Frye standard may be used in some state courts.
d. North Carolina follows the Frye rule.
e. None of the above is true. - ANSWER: C
Which is not one of the Daubert factors?
a. Whether the theory existed before litigation began.
b. Whether the theory or technique in question can be and has been tested.
c. The theory's known or potential error rate.
d. The theory has attracted widespread acceptance.
e. All are Daubert factors - ANSWER: E
Which is not a Daubert factor?
a. Can the theory be or was the theory tested?
b. Was the theory subject to peer review?
c. There is general acceptance.
d. Known or potential rate of error of the method.
e. All of the above are Daubert factors. - ANSWER: E
Which item is not required in an expert's report?
a. List of cases that the expert has testified or been deposed in the past 10 years.
b. All opinions to be expressed.
c. The exhibits to be used.
d. List of all publications within the past 10 years.
e. All of the above. - ANSWER: A
Which statement about witness immunity is false?
a. A lawsuit against an expert for negligence is one type of tort action.
b. A negligence claim has a shorter statute of limitation than a breach of contract action.
c. A claim for breach of a contract generally is brought in a state court.
d. Communication made in a judicial proceeding carries an absolute privilege against civil suits for
damages.
