Question 1

Which of the following is a commonly used ratio to discover inventory-related fraud?

Accepted Answer

A)  Number of days' in receivable ratio 
B)  Sales return percentage ratio 
C)  Gross profit ratio 
D)  Earnings per share 
A)  Number of days' in receivable ratio 
B)  Sales return percentage ratio 
C)  Gross profit ratio 
D)  Earnings per share

Question 2

Which of the following is NOT true regarding "topside" journal entries used to commit financial statement fraud?

Accepted Answer

A)  Upper management usually records the journal entry 
B)  Entries are recorded to subsidiary ledgers 
C)  The journal entry may be recorded after normal business hours 
D)  Entries often bypass the normal process for posting journal entries 
A)  Upper management usually records the journal entry 
B)  Entries are recorded to subsidiary ledgers 
C)  The journal entry may be recorded after normal business hours 
D)  Entries often bypass the normal process for posting journal entries

Question 3

If an auditor notices fraud symptoms related to inventory, one of the best ways to confirm if a fraud is occurring is to:

Accepted Answer

A)  ask senior management. 
B)  search out tips and complaints from employees who may be aware that something isn't right. 
C)  report suspicions to regulatory agencies for further investigation. 
D)  continue searching for additional symptoms of the potential fraud. 
A)  ask senior management. 
B)  search out tips and complaints from employees who may be aware that something isn't right. 
C)  report suspicions to regulatory agencies for further investigation. 
D)  continue searching for additional symptoms of the potential fraud.

Question 4

Which of the following ratios is relatively more helpful in highlighting revenue-related frauds?

Accepted Answer

A)  Working capital turnover ratio 
B)  Earnings per share 
C)  Asset turnover ratio 
D)  Accounts receivable turnover 
A)  Working capital turnover ratio 
B)  Earnings per share 
C)  Asset turnover ratio 
D)  Accounts receivable turnover

Question 5

Overstating of sales in the income statement leads to a:

Accepted Answer

A)  decrease in inventory turnover ratio. 
B)  decrease in EPS. 
C)  increase in gross profit ratio. 
D)  decrease in accounts receivable ratio. 
A)  decrease in inventory turnover ratio. 
B)  decrease in EPS. 
C)  increase in gross profit ratio. 
D)  decrease in accounts receivable ratio.

Question 6

Which of the following depicts the practice that suppliers use to encourage customers to buy extra inventory so as to increase current-year sales?

Accepted Answer

A)  Kiting 
B)  Channel stuffing 
C)  Redating transactions 
D)  Partial shipments 
A)  Kiting 
B)  Channel stuffing 
C)  Redating transactions 
D)  Partial shipments

Question 7

What is the practice in which cash receipts are misapplied to hide fictitious receivables called?

Accepted Answer

A)  Bill-and-hold 
B)  Channel stuffing 
C)  Partial shipment 
D)  Kiting 
A)  Bill-and-hold 
B)  Channel stuffing 
C)  Partial shipment 
D)  Kiting

Question 8

The presence of fraud symptoms should cause a fraud examiner to do which of the following?

Accepted Answer

A)  Refuse to complete the audit 
B)  Report the fraud to the SEC 
C)  Call a press conference to detail the findings 
D)  Launch an investigation 
A)  Refuse to complete the audit 
B)  Report the fraud to the SEC 
C)  Call a press conference to detail the findings 
D)  Launch an investigation

Question 9

Which of the following is defined as selling unused assets for a promise to buy them or similar assets back at roughly the same price?

Accepted Answer

A)  Bill-and-hold sales 
B)  Kiting 
C)  Channel stuffing 
D)  Round-tripping 
A)  Bill-and-hold sales 
B)  Kiting 
C)  Channel stuffing 
D)  Round-tripping

Question 10

How is the sales return percentage ratio calculated?

Accepted Answer

A)  By dividing sales returns by total sales 
B)  By dividing total sales by sales returns 
C)  By dividing sales returns by net sales 
D)  By dividing net sales by sales returns 
A)  By dividing sales returns by total sales 
B)  By dividing total sales by sales returns 
C)  By dividing sales returns by net sales 
D)  By dividing net sales by sales returns

Which of the following is a commonly used ratio to discover inventory-related fraud?

Which of the following is NOT true regarding "topside" journal entries used to commit financial statement fraud?

If an auditor notices fraud symptoms related to inventory, one of the best ways to confirm if a fraud is occurring is to:

Which of the following ratios is relatively more helpful in highlighting revenue-related frauds?

Overstating of sales in the income statement leads to a:

Which of the following depicts the practice that suppliers use to encourage customers to buy extra inventory so as to increase current-year sales?

What is the practice in which cash receipts are misapplied to hide fictitious receivables called?

The presence of fraud symptoms should cause a fraud examiner to do which of the following?

Which of the following is defined as selling unused assets for a promise to buy them or similar assets back at roughly the same price?

How is the sales return percentage ratio calculated?

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Preventing Fraud

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters

Exam 12: Revenue- and Inventory-Related Financial Statement Frauds

Which of the following is a commonly used ratio to discover inventory-related fraud?

Which of the following is NOT true regarding "topside" journal entries used to commit financial statement fraud?

If an auditor notices fraud symptoms related to inventory, one of the best ways to confirm if a fraud is occurring is to:

Which of the following ratios is relatively more helpful in highlighting revenue-related frauds?

Overstating of sales in the income statement leads to a:

Which of the following depicts the practice that suppliers use to encourage customers to buy extra inventory so as to increase current-year sales?

What is the practice in which cash receipts are misapplied to hide fictitious receivables called?

The presence of fraud symptoms should cause a fraud examiner to do which of the following?

Which of the following is defined as selling unused assets for a promise to buy them or similar assets back at roughly the same price?

How is the sales return percentage ratio calculated?

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Preventing Fraud

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters