Fraud Examination - Exam 1 Quiz well
answered already passed
Which of the following is NOT an element of a Ponzi scheme?
a. Gaining other's confidence
b. Promising abnormally high returns
c. Collected money is invested
d. Investment principle is partially used to make payments to previous investors - correct
answer ✔✔ c. Collected money is invested
Which of the following is a common example of vendor fraud?
a. Fraud perpetrated through collusion between buyers and vendors
b. Fraud perpetrated by upper management
c. The perpetrator physically removes the inventory from the business premises
d. A fraud perpetrated through financial statement manipulation - correct answer ✔✔ a. Fraud
perpetrated through collusion between buyers and vendors
A company is a victim of a $414 million fraud. At that time its profit margin is 10%. How much
additional revenue should the company generate in order to recover the effect on net income?
a. $41.4 million
b. $414 million
c. $4.14 billion
d. $41.4 billion - correct answer ✔✔ c. $4.14 billion (divide the amount of fraud by the profit
margin; $414 million/.10 = $4.14 billion)
What is the most cost-effective way to minimize the cost of fraud?
, a. Prevention
b. Detection
c. Investigation
d. Prosecution - correct answer ✔✔ a. Prevention
Employee embezzlement can be direct or indirect. Indirect fraud occurs when:
a. an employee uses company assets to run his/her private business
b. employees establish dummy companies and have their employers pay for goods that are not
actually delivered
c. an employee receives a kickback from a vendor
d. an employee steals company cash, inventory, tools, or other assets - correct answer ✔✔ c. an
employee receives a kickback from a vendor
Each of the following is an example of an abuse of a control environment EXCEPT:
a. The HR department failed to check an applicant's background and hired someone who had
committed fraud in the past
b. A manager instructs employees not to share passwords, and then shares her passwords with
her immediate assistant
c. A company has established codes of conduct and conducts training meetings to teach
employees to distinguish between acceptable and unacceptable behavior. Attendance is
voluntary.
d. The employees know who has responsibility for each business activity. Procedures to follow
are in place - correct answer ✔✔ d. The employees know who has responsibility for each
business activity. Procedures to follow are in place
Which of the following act/legislation requires every public company to have a code of ethics to
help deter wrongdoing?
a. The Glass Steagall legislation
b. The Sarbanes-Oxley legislation
answered already passed
Which of the following is NOT an element of a Ponzi scheme?
a. Gaining other's confidence
b. Promising abnormally high returns
c. Collected money is invested
d. Investment principle is partially used to make payments to previous investors - correct
answer ✔✔ c. Collected money is invested
Which of the following is a common example of vendor fraud?
a. Fraud perpetrated through collusion between buyers and vendors
b. Fraud perpetrated by upper management
c. The perpetrator physically removes the inventory from the business premises
d. A fraud perpetrated through financial statement manipulation - correct answer ✔✔ a. Fraud
perpetrated through collusion between buyers and vendors
A company is a victim of a $414 million fraud. At that time its profit margin is 10%. How much
additional revenue should the company generate in order to recover the effect on net income?
a. $41.4 million
b. $414 million
c. $4.14 billion
d. $41.4 billion - correct answer ✔✔ c. $4.14 billion (divide the amount of fraud by the profit
margin; $414 million/.10 = $4.14 billion)
What is the most cost-effective way to minimize the cost of fraud?
, a. Prevention
b. Detection
c. Investigation
d. Prosecution - correct answer ✔✔ a. Prevention
Employee embezzlement can be direct or indirect. Indirect fraud occurs when:
a. an employee uses company assets to run his/her private business
b. employees establish dummy companies and have their employers pay for goods that are not
actually delivered
c. an employee receives a kickback from a vendor
d. an employee steals company cash, inventory, tools, or other assets - correct answer ✔✔ c. an
employee receives a kickback from a vendor
Each of the following is an example of an abuse of a control environment EXCEPT:
a. The HR department failed to check an applicant's background and hired someone who had
committed fraud in the past
b. A manager instructs employees not to share passwords, and then shares her passwords with
her immediate assistant
c. A company has established codes of conduct and conducts training meetings to teach
employees to distinguish between acceptable and unacceptable behavior. Attendance is
voluntary.
d. The employees know who has responsibility for each business activity. Procedures to follow
are in place - correct answer ✔✔ d. The employees know who has responsibility for each
business activity. Procedures to follow are in place
Which of the following act/legislation requires every public company to have a code of ethics to
help deter wrongdoing?
a. The Glass Steagall legislation
b. The Sarbanes-Oxley legislation
