Question 1

Discuss the steps that an internal auditor should take when fraud is suspected.

Accepted Answer

When fraud is suspected,the internal auditor should:

Question 2

Which of these is the perspective of the balanced scorecard that indicates whether the company's strategy and operations add value to shareholders?

Accepted Answer

A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective. 
A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective. A

Question 3

Which of the following are key characteristic(s)of divisional incentive compensation plans?

Accepted Answer

A) cash bonuses and profit sharing for short-term performance. 
B) deferred compensation for long-term incentive. 
C) special awards for particular actions or extraordinary performance. 
D) All of the answers are correct. 
A) cash bonuses and profit sharing for short-term performance. 
B) deferred compensation for long-term incentive. 
C) special awards for particular actions or extraordinary performance. 
D) All of the answers are correct. D

Question 4

What is a fundamental principle of internal control to prevent fraud?

Accepted Answer

A) Separate duties and responsibilities. 
B) Require employee collusion. 
C) Eliminate internal audits. 
D) Eliminate independent audits. 
A) Separate duties and responsibilities. 
B) Require employee collusion. 
C) Eliminate internal audits. 
D) Eliminate independent audits.

Question 5

Which of the following is a key characteristic of divisional incentive compensation plans for rewarding short-term performance?

Accepted Answer

A) Cash bonuses and profit sharing 
B) Deferred compensation 
C) Employee stock options 
D) Retirement plans 
A) Cash bonuses and profit sharing 
B) Deferred compensation 
C) Employee stock options 
D) Retirement plans

Question 6

Josephson and Associates is a consulting firm that spends $60,000 per year advertising the company's brand names and trademarks.Gross margin on sales after taxes is up $66,000 each year because of these advertising expenditures.For the purposes of this problem,assume that the firm makes all advertising expenditures on the first day of each year and that the $66,000 extra after-tax gross margin on sales occurs on the first day of the next year.Excluding any advertising assets or profits,
Josephson has $200,000 of other assets that have produced an after-tax income of $20,000 per year.Josephson follows a policy of declaring dividends each year equal to net income,and it has a cost of capital of 10 percent per year.
Required:
a.Is the advertising policy a sensible one? Explain.
b.How should accounting report the expenditures for advertising in Josephson's financial statements to reflect accurately the managerial decision of advertising at the rate of $60,000 per year? In other words,how can the firm account for the advertising expenditures in such a way that the accounting rate of return for the advertising project and the rate of return on assets for the firm reflect the 10-percent return from advertising?

Accepted Answer

a.The decision to advertise,like the dec

Question 7

The balanced scorecard is a causal model of lead and lag indicators of performance and is based on the financial perspective and the non-financial perspective(s)of

Accepted Answer

A) learning and growth. 
B) internal business and production process. 
C) customer. 
D) All of the answers are correct. 
A) learning and growth. 
B) internal business and production process. 
C) customer. 
D) All of the answers are correct.

Question 8

Why do managers often have incentives for committing financial fraud?

Accepted Answer

A) Bonuses,merit pay increases,and promotions often depend on reported accounting numbers. 
B) Managers given a long-term perspective by their employment and pay arrangements will have an incentive to "manager earnings." 
C) Bonuses,merit pay increases,and promotions often depend on reported accounting numbers,and managers given a long-term perspective by their employment and pay arrangements will have an incentive to "manager earnings." 
D) None of the answers is correct. 
A) Bonuses,merit pay increases,and promotions often depend on reported accounting numbers. 
B) Managers given a long-term perspective by their employment and pay arrangements will have an incentive to "manager earnings." 
C) Bonuses,merit pay increases,and promotions often depend on reported accounting numbers,and managers given a long-term perspective by their employment and pay arrangements will have an incentive to "manager earnings." 
D) None of the answers is correct.

Question 9

How could activity-based costing shift the emphasis from managing overhead to managing
supplier relations?

Accepted Answer

Activity-based costing identifies activi

Question 10

Which stage of a product's life cycle establishes 80 to 90 percent of what the product's costs will be?

Accepted Answer

A) Product design and development 
B) Product manufacturing 
C) Product controlling 
D) Product planning 
A) Product design and development 
B) Product manufacturing 
C) Product controlling 
D) Product planning

Question 11

Which of the following statements is true concerning the agency view of motivation?

Accepted Answer

A) The agency view of motivation provides desirable rewards. 
B) The agency view of motivation provides a high probability that behaving as the organization wishes will lead to the rewards. 
C) The agency view of motivation looks for ways to encourage agents to act in the interests of principals. 
D) None of the answers is correct. 
A) The agency view of motivation provides desirable rewards. 
B) The agency view of motivation provides a high probability that behaving as the organization wishes will lead to the rewards. 
C) The agency view of motivation looks for ways to encourage agents to act in the interests of principals. 
D) None of the answers is correct.

Question 12

Which of these is the perspective of the balanced scorecard that includes supplier relationships and outsourcing?

Accepted Answer

A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective. 
A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective.

Question 13

Explain the linkages among the four balanced scorecard perspectives.

Accepted Answer

One can think of performing well on lear

Question 14

Which of these is the perspective of the balanced scorecard that is at the top of the list for a company's lenders and shareholders?

Accepted Answer

A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective. 
A) financial perspective. 
B) internal business and production process perspective. 
C) learning and growth perspective. 
D) customer perspective.

Question 15

Fraudulent financial reporting that results in higher reported earnings sometimes

Accepted Answer

A) also overstates taxable income. 
B) shifts income from a future period to the present period,and then overstates taxable income in the present period that might be offset by lower taxable income in a future period 
C) sometimes overstates taxable income in early periods that likely increases the present value of a company's tax payments. 
D) All of the answers are correct. 
A) also overstates taxable income. 
B) shifts income from a future period to the present period,and then overstates taxable income in the present period that might be offset by lower taxable income in a future period 
C) sometimes overstates taxable income in early periods that likely increases the present value of a company's tax payments. 
D) All of the answers are correct.

Question 16

What is true of companies that use relative performance evaluation?

Accepted Answer

A) Divisional performance is compared with that of other divisions in the same industry. 
B) Managers are not shielded from the risk of managing a division in a poorly performing industry. 
C) Incentives are not provided for managers to move out of low-performing to high-performing industries. 
D) All of the answers are correct. 
A) Divisional performance is compared with that of other divisions in the same industry. 
B) Managers are not shielded from the risk of managing a division in a poorly performing industry. 
C) Incentives are not provided for managers to move out of low-performing to high-performing industries. 
D) All of the answers are correct.

Question 17

What occurs when applying expectancy theory to employees in nonprofit organizations?

Accepted Answer

A) Cash awards are more attractive,and therefore more motivating than prizes. 
B) Prizes are more attractive,and therefore more motivating than cash awards. 
C) Stock options are more attractive,and therefore more motivating than cash awards. 
D) Stock options are more attractive,and therefore more motivating than prizes. 
A) Cash awards are more attractive,and therefore more motivating than prizes. 
B) Prizes are more attractive,and therefore more motivating than cash awards. 
C) Stock options are more attractive,and therefore more motivating than cash awards. 
D) Stock options are more attractive,and therefore more motivating than prizes.

Question 18

Which of these is a common fraud in financial reporting?

Accepted Answer

A) improper revenue recognition. 
B) understating inventory. 
C) overstating liabilities. 
D) understating assets. 
A) improper revenue recognition. 
B) understating inventory. 
C) overstating liabilities. 
D) understating assets.

Question 19

Which of these is a common type of fraud on financial statements?

Accepted Answer

A) improper revenue recognition. 
B) improper expense recognition. 
C) understating inventory. 
D) miscounting cash 
A) improper revenue recognition. 
B) improper expense recognition. 
C) understating inventory. 
D) miscounting cash

Question 20

Economists argue that corruption requires the following element(s):

Accepted Answer

A) An individual,such as a government official,must have discretionary power to award a contract or rights. 
B) There must be economic benefits associated with the discretionary power to award a contract or rights. 
C) The legal system must be unlikely to detect wrongdoing. 
D) All of the answers are correct. 
A) An individual,such as a government official,must have discretionary power to award a contract or rights. 
B) There must be economic benefits associated with the discretionary power to award a contract or rights. 
C) The legal system must be unlikely to detect wrongdoing. 
D) All of the answers are correct.

Discuss the steps that an internal auditor should take when fraud is suspected.

Which of these is the perspective of the balanced scorecard that indicates whether the company's strategy and operations add value to shareholders?

Which of the following are key characteristic(s)of divisional incentive compensation plans?

What is a fundamental principle of internal control to prevent fraud?

Which of the following is a key characteristic of divisional incentive compensation plans for rewarding short-term performance?

The balanced scorecard is a causal model of lead and lag indicators of performance and is based on the financial perspective and the non-financial perspective(s)of

Why do managers often have incentives for committing financial fraud?

How could activity-based costing shift the emphasis from managing overhead to managing supplier relations?

Which stage of a product's life cycle establishes 80 to 90 percent of what the product's costs will be?

Which of the following statements is true concerning the agency view of motivation?

Which of these is the perspective of the balanced scorecard that includes supplier relationships and outsourcing?

Explain the linkages among the four balanced scorecard perspectives.

Which of these is the perspective of the balanced scorecard that is at the top of the list for a company's lenders and shareholders?

Fraudulent financial reporting that results in higher reported earnings sometimes

What is true of companies that use relative performance evaluation?

What occurs when applying expectancy theory to employees in nonprofit organizations?

Which of these is a common fraud in financial reporting?

Which of these is a common type of fraud on financial statements?

Economists argue that corruption requires the following element(s):

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Allocating Costs to Responsibility Centers

Filters

Exam 12: Incentive Issues

Discuss the steps that an internal auditor should take when fraud is suspected.

Which of these is the perspective of the balanced scorecard that indicates whether the company's strategy and operations add value to shareholders?

Which of the following are key characteristic(s)of divisional incentive compensation plans?

What is a fundamental principle of internal control to prevent fraud?

Which of the following is a key characteristic of divisional incentive compensation plans for rewarding short-term performance?

The balanced scorecard is a causal model of lead and lag indicators of performance and is based on the financial perspective and the non-financial perspective(s)of

Why do managers often have incentives for committing financial fraud?

How could activity-based costing shift the emphasis from managing overhead to managing supplier relations?

Which stage of a product's life cycle establishes 80 to 90 percent of what the product's costs will be?

Which of the following statements is true concerning the agency view of motivation?

Which of these is the perspective of the balanced scorecard that includes supplier relationships and outsourcing?

Explain the linkages among the four balanced scorecard perspectives.

Which of these is the perspective of the balanced scorecard that is at the top of the list for a company's lenders and shareholders?

Fraudulent financial reporting that results in higher reported earnings sometimes

What is true of companies that use relative performance evaluation?

What occurs when applying expectancy theory to employees in nonprofit organizations?

Which of these is a common fraud in financial reporting?

Which of these is a common type of fraud on financial statements?

Economists argue that corruption requires the following element(s):

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Allocating Costs to Responsibility Centers

Filters