Question 1

When a company understates the cost of goods sold,what is the effect on the inventory turnover ratio?

Accepted Answer

A) The ratio might increase or decrease depending upon the amount by which it is understated. 
B) The ratio will decrease. 
C) No effect. 
D) The ratio will increase. 
A) The ratio might increase or decrease depending upon the amount by which it is understated. 
B) The ratio will decrease. 
C) No effect. 
D) The ratio will increase.

Question 2

According to a study sponsored by The Committee of Sponsoring Organizations (COSO),the most common way to manipulate revenue accounts is by:

Accepted Answer

A) reclassifying expenses as revenues. 
B) recording fictitious revenues. 
C) inappropriately reducing sales returns and allowances. 
D) prematurely recording revenue. 
A) reclassifying expenses as revenues. 
B) recording fictitious revenues. 
C) inappropriately reducing sales returns and allowances. 
D) prematurely recording revenue.

Question 3

"Dex shuffling" refers to:

Accepted Answer

A) changing the publication dates on telephone directories to inflate revenue. 
B) selling equipment at twice the marked price and offering huge discounts.. 
C) sales terms and arrangements made outside normal reporting channels. 
D) improperly recognizing revenue and altering documents to hide the fraud. 
A) changing the publication dates on telephone directories to inflate revenue. 
B) selling equipment at twice the marked price and offering huge discounts.. 
C) sales terms and arrangements made outside normal reporting channels. 
D) improperly recognizing revenue and altering documents to hide the fraud.

Question 4

Under SAS 99,financial statement auditors are required to make inquires of all but which of the following individuals or groups about possible fraudulent activity or red flags.

Accepted Answer

A) Management 
B) Audit committee members 
C) Internal audit personnel 
D) Shareholders 
A) Management 
B) Audit committee members 
C) Internal audit personnel 
D) Shareholders

Question 5

One of the first tasks to understand the various revenue transactions in the company to uncover the revenue frauds is to:

Accepted Answer

A) determine how each transaction could be misstated. 
B) evaluate the efficiency of the management. 
C) analyze and diagram the various transactions between an organization and its customers. 
D) identify scheme-specific symptoms and proactively search for more fraud. 
A) determine how each transaction could be misstated. 
B) evaluate the efficiency of the management. 
C) analyze and diagram the various transactions between an organization and its customers. 
D) identify scheme-specific symptoms and proactively search for more fraud.

Question 6

Which of the following is a typical symptom of a revenue-related fraud?

Accepted Answer

A) Significant new, unknown customers. 
B) Fall in gross profit percentage compared to the previous year. 
C) Purchases from suppliers not approved on vendor lists. 
D) The company having a huge customer base. 
A) Significant new, unknown customers. 
B) Fall in gross profit percentage compared to the previous year. 
C) Purchases from suppliers not approved on vendor lists. 
D) The company having a huge customer base.

Question 7

​Which of the following statements is the least useful means to detect revenue-related frauds?

Accepted Answer

A) ​comparing financial statement amounts with the assets they represent 
B) ​comparing the financial statement performance between similar companies within the same industry 
C) ​focusing on changes in financial statement revenue-related relationships 
D) ​focusing on changes in recorded account balances from period to period 
A) ​comparing financial statement amounts with the assets they represent 
B) ​comparing the financial statement performance between similar companies within the same industry 
C) ​focusing on changes in financial statement revenue-related relationships 
D) ​focusing on changes in recorded account balances from period to period

Question 8

Overstating ending inventory has the following effect on cost of goods sold and net income respectively.

Accepted Answer

A) COGS - overstated and NI - overstated 
B) COGS - understated and NI - overstated 
C) COGS - overstated and NI - understated 
D) COGS - No effect and NI - understated 
A) COGS - overstated and NI - overstated 
B) COGS - understated and NI - overstated 
C) COGS - overstated and NI - understated 
D) COGS - No effect and NI - understated

Question 9

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

When a company understates the cost of goods sold,what is the effect on the inventory turnover ratio?

According to a study sponsored by The Committee of Sponsoring Organizations (COSO),the most common way to manipulate revenue accounts is by:

"Dex shuffling" refers to:

Under SAS 99,financial statement auditors are required to make inquires of all but which of the following individuals or groups about possible fraudulent activity or red flags.

One of the first tasks to understand the various revenue transactions in the company to uncover the revenue frauds is to:

Which of the following is a typical symptom of a revenue-related fraud?

Which of the following statements is the least useful means to detect revenue-related frauds?

Overstating ending inventory has the following effect on cost of goods sold and net income respectively.

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

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

When a company understates the cost of goods sold,what is the effect on the inventory turnover ratio?

According to a study sponsored by The Committee of Sponsoring Organizations (COSO),the most common way to manipulate revenue accounts is by:

"Dex shuffling" refers to:

Under SAS 99,financial statement auditors are required to make inquires of all but which of the following individuals or groups about possible fraudulent activity or red flags.

One of the first tasks to understand the various revenue transactions in the company to uncover the revenue frauds is to:

Which of the following is a typical symptom of a revenue-related fraud?

​Which of the following statements is the least useful means to detect revenue-related frauds?

Overstating ending inventory has the following effect on cost of goods sold and net income respectively.

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

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

Which of the following statements is the least useful means to detect revenue-related frauds?