Question 1

Which of the following is NOT a "strange" financial statement relationship?

Accepted Answer

A)  Increased revenues with decreased cash flows 
B)  Increased revenues with decreased receivables 
C)  Decreased inventory with decreased payables 
D)  Decreased volume with decreased cost per unit 
A)  Increased revenues with decreased cash flows 
B)  Increased revenues with decreased receivables 
C)  Decreased inventory with decreased payables 
D)  Decreased volume with decreased cost per unit

Question 2

Recording an expense to conceal fraud involves making a fictitious journal entry. A faulty journal entry is an example of which fraud symptom?

Accepted Answer

A)  Accounting anomaly 
B)  Internal control weakness 
C)  Unusual behavior 
D)  Analytical anomaly 
A)  Accounting anomaly 
B)  Internal control weakness 
C)  Unusual behavior 
D)  Analytical anomaly

Question 3

There are three simple procedures that small business owners should do on a timely basis to prevent fraud when they can't afford sufficient employees to guarantee effective segregation of duties. Which of the following is NOT one among them?

Accepted Answer

A)  Pay everything by check so that there is a record. 
B)  Always open the bank statement and reconcile it themselves. 
C)  Allow one key employee to operate the bank account personally. 
D)  Sign every check themselves and not delegate the signing to anyone else. 
A)  Pay everything by check so that there is a record. 
B)  Always open the bank statement and reconcile it themselves. 
C)  Allow one key employee to operate the bank account personally. 
D)  Sign every check themselves and not delegate the signing to anyone else.

Question 4

Which of the following is NOT a common accounting anomaly fraud symptom?

Accepted Answer

A)  Faulty journal entries 
B)  Inaccuracies in source documents 
C)  Rounding adjustments 
D)  Inaccuracies in ledgers 
A)  Faulty journal entries 
B)  Inaccuracies in source documents 
C)  Rounding adjustments 
D)  Inaccuracies in ledgers

Question 5

Which of the following usually motivates embezzlers to indulge in a fraudulent activity?

Accepted Answer

A)  Pursuit of immediate gratification 
B)  Safeguard their future 
C)  Cover expenses required to live 
D)  Protection against uncertainties 
A)  Pursuit of immediate gratification 
B)  Safeguard their future 
C)  Cover expenses required to live 
D)  Protection against uncertainties

Question 6

Which of the following statements regarding fraud symptoms is NOT accurate?

Accepted Answer

A)  With fraud, it is not usually obvious that a crime has been committed. 
B)  To detect fraud, red flags must be investigated. 
C)  Fraud symptoms provide conclusive proof of fraud. 
D)  Many fraud symptoms go unnoticed. 
A)  With fraud, it is not usually obvious that a crime has been committed. 
B)  To detect fraud, red flags must be investigated. 
C)  Fraud symptoms provide conclusive proof of fraud. 
D)  Many fraud symptoms go unnoticed.

Question 7

In which stage do auditors have a good chance of detecting fraud, if the audit samples include altered documents and miscounts?

Accepted Answer

A)  Theft act 
B)  Concealment 
C)  Conversion 
D)  Layering 
A)  Theft act 
B)  Concealment 
C)  Conversion 
D)  Layering

Question 8

Which of the following is a highly suspicious financial statement relationship?

Accepted Answer

A)  Increased revenues with decreased receivables 
B)  Decreased production with decreased scrap 
C)  Increased volume with increased scrap 
D)  Decreased cost per unit with increased level of output 
A)  Increased revenues with decreased receivables 
B)  Decreased production with decreased scrap 
C)  Increased volume with increased scrap 
D)  Decreased cost per unit with increased level of output

Question 9

How does a smart embezzler manipulate accounting records to conceal fraud?

Accepted Answer

A)  By increasing assets 
B)  By manipulating stock accounts 
C)  By manipulating dividends 
D)  By increasing expenses 
A)  By increasing assets 
B)  By manipulating stock accounts 
C)  By manipulating dividends 
D)  By increasing expenses

Question 10

Which of the following scenarios is least conducive to fraud?

Accepted Answer

A)  Outstanding bills at home 
B)  Mandatory vacation time 
C)  Economic downturns 
D)  Moral decay in upper management 
A)  Outstanding bills at home 
B)  Mandatory vacation time 
C)  Economic downturns 
D)  Moral decay in upper management

Question 11

Which of the following actions would most likely create an opportunity for fraud?

Accepted Answer

A)  Requiring all documents over seven years old be shredded 
B)  Requiring that the department manager authorize purchase orders only for purchase amounts for more than $100 
C)  Requiring one password code for each entire department to enter the storeroom 
D)  Using a manual accounting system 
A)  Requiring all documents over seven years old be shredded 
B)  Requiring that the department manager authorize purchase orders only for purchase amounts for more than $100 
C)  Requiring one password code for each entire department to enter the storeroom 
D)  Using a manual accounting system

Question 12

Which of the following is NOT a fraud symptom related to internal control weaknesses?

Accepted Answer

A)  Lack of segregation of duties 
B)  Lack of physical safeguards 
C)  Lack of proper authorization 
D)  Excessive turnover of executives 
A)  Lack of segregation of duties 
B)  Lack of physical safeguards 
C)  Lack of proper authorization 
D)  Excessive turnover of executives

Question 13

Allowing the clerk who checked out customer A to handle a return by that same individual without presenting the receipt would NOT be an example of which of the following weaknesses in internal controls?

Accepted Answer

A)  Lack of segregation of duties 
B)  Lack of requiring proper documents and records 
C)  Lack of independent checks 
D)  Lack of an adequate accounting system 
A)  Lack of segregation of duties 
B)  Lack of requiring proper documents and records 
C)  Lack of independent checks 
D)  Lack of an adequate accounting system

Question 14

All transactions related to specific accounts, such as cash or inventory, are summarized in the:

Accepted Answer

A)  journal. 
B)  ledger. 
C)  trial balance. 
D)  balance sheet. 
A)  journal. 
B)  ledger. 
C)  trial balance. 
D)  balance sheet.

Question 15

Who in an organization is NOT in a good position to recognize fraud during the theft act?

Accepted Answer

A)  Other employees 
B)  Managers 
C)  Auditors 
D)  Coworkers 
A)  Other employees 
B)  Managers 
C)  Auditors 
D)  Coworkers

Question 16

An employee decides to steal cash from his/her employer. What would be the best way to conceal such a fraud?

Accepted Answer

A)  Recording the stolen cash as an expense. 
B)  Writing down accounts payable for a supplier. 
C)  Increasing accounts receivable from a customer. 
D)  Writing down as dividend paid to shareholders. 
A)  Recording the stolen cash as an expense. 
B)  Writing down accounts payable for a supplier. 
C)  Increasing accounts receivable from a customer. 
D)  Writing down as dividend paid to shareholders.

Question 17

After committing fraud, an individual often exhibits unusual and recognizable behavior patterns to cope with the stress. Perpetrators experience these behavioral signals in which sequence?

Accepted Answer

A)  Guilt - Stress - Fear - Behavior changes 
B)  Fear - Guilt - Stress - Behavior changes 
C)  Fear - Guilt - Behavior changes - Stress 
D)  Guilt - Fear - Stress - Behavior changes 
A)  Guilt - Stress - Fear - Behavior changes 
B)  Fear - Guilt - Stress - Behavior changes 
C)  Fear - Guilt - Behavior changes - Stress 
D)  Guilt - Fear - Stress - Behavior changes

Question 18

A major difference between financial statement auditors and fraud examiners is that most financial statement auditors:

Accepted Answer

A)  match documents to verify whether support exists for recorded information. 
B)  determine whether the documents are originals. 
C)  determine whether the expenditures make sense. 
D)  check whether all aspects of the documentation are in order. 
A)  match documents to verify whether support exists for recorded information. 
B)  determine whether the documents are originals. 
C)  determine whether the expenditures make sense. 
D)  check whether all aspects of the documentation are in order.

Question 19

Which of the following is a control problem related to segregation of duties?

Accepted Answer

A)  Julie writes expense checks and Mark collects cash from customers. 
B)  Bob order office supplies and deposits the company's checks. 
C)  Steve records receivables and writes off bad debts. 
D)  Rebecca records journal entries and orders lunch. 
A)  Julie writes expense checks and Mark collects cash from customers. 
B)  Bob order office supplies and deposits the company's checks. 
C)  Steve records receivables and writes off bad debts. 
D)  Rebecca records journal entries and orders lunch.

Question 20

Which of the following is an analytical fraud symptom?

Accepted Answer

A)  Increase in past due accounts receivable 
B)  Significant increase or decrease in account balances 
C)  Lack of independent checks 
D)  Excessive voids or credits 
A)  Increase in past due accounts receivable 
B)  Significant increase or decrease in account balances 
C)  Lack of independent checks 
D)  Excessive voids or credits

Which of the following is NOT a "strange" financial statement relationship?

Recording an expense to conceal fraud involves making a fictitious journal entry. A faulty journal entry is an example of which fraud symptom?

There are three simple procedures that small business owners should do on a timely basis to prevent fraud when they can't afford sufficient employees to guarantee effective segregation of duties. Which of the following is NOT one among them?

Which of the following is NOT a common accounting anomaly fraud symptom?

Which of the following usually motivates embezzlers to indulge in a fraudulent activity?

Which of the following statements regarding fraud symptoms is NOT accurate?

In which stage do auditors have a good chance of detecting fraud, if the audit samples include altered documents and miscounts?

Which of the following is a highly suspicious financial statement relationship?

How does a smart embezzler manipulate accounting records to conceal fraud?

Which of the following scenarios is least conducive to fraud?

Which of the following actions would most likely create an opportunity for fraud?

Which of the following is NOT a fraud symptom related to internal control weaknesses?

Allowing the clerk who checked out customer A to handle a return by that same individual without presenting the receipt would NOT be an example of which of the following weaknesses in internal controls?

All transactions related to specific accounts, such as cash or inventory, are summarized in the:

Who in an organization is NOT in a good position to recognize fraud during the theft act?

An employee decides to steal cash from his/her employer. What would be the best way to conceal such a fraud?

After committing fraud, an individual often exhibits unusual and recognizable behavior patterns to cope with the stress. Perpetrators experience these behavioral signals in which sequence?

A major difference between financial statement auditors and fraud examiners is that most financial statement auditors:

Which of the following is a control problem related to segregation of duties?

Which of the following is an analytical fraud symptom?

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Preventing Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters

Exam 5: Recognizing the Symptoms of Fraud

Which of the following is NOT a "strange" financial statement relationship?

Recording an expense to conceal fraud involves making a fictitious journal entry. A faulty journal entry is an example of which fraud symptom?

There are three simple procedures that small business owners should do on a timely basis to prevent fraud when they can't afford sufficient employees to guarantee effective segregation of duties. Which of the following is NOT one among them?

Which of the following is NOT a common accounting anomaly fraud symptom?

Which of the following usually motivates embezzlers to indulge in a fraudulent activity?

Which of the following statements regarding fraud symptoms is NOT accurate?

In which stage do auditors have a good chance of detecting fraud, if the audit samples include altered documents and miscounts?

Which of the following is a highly suspicious financial statement relationship?

How does a smart embezzler manipulate accounting records to conceal fraud?

Which of the following scenarios is least conducive to fraud?

Which of the following actions would most likely create an opportunity for fraud?

Which of the following is NOT a fraud symptom related to internal control weaknesses?

Allowing the clerk who checked out customer A to handle a return by that same individual without presenting the receipt would NOT be an example of which of the following weaknesses in internal controls?

All transactions related to specific accounts, such as cash or inventory, are summarized in the:

Who in an organization is NOT in a good position to recognize fraud during the theft act?

An employee decides to steal cash from his/her employer. What would be the best way to conceal such a fraud?

After committing fraud, an individual often exhibits unusual and recognizable behavior patterns to cope with the stress. Perpetrators experience these behavioral signals in which sequence?

A major difference between financial statement auditors and fraud examiners is that most financial statement auditors:

Which of the following is a control problem related to segregation of duties?

Which of the following is an analytical fraud symptom?

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Preventing Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters