Question 1

Describe the characteristics found to exist in most divisional incentive compensations plans.

Accepted Answer

The characteristics

Question 2

Summarize the recommendations of the Treadway Commission.Explain the steps managers should take to reduce the possibility of fraudulent financial reporting.

Accepted Answer

The Treadway Commission's recommendation

Question 3

Identify (a)the purpose of internal accounting controls and (b)the importance of record keeping.

Accepted Answer

The answer of Identify (a)the purpose of internal accounting controls...

Question 4

Which of these is a common fraud in financial reporting?

Accepted Answer

A) understating revenues. 
B) overstating inventory. 
C) overstating liabilities. 
D) understating assets. 
A) understating revenues. 
B) overstating inventory. 
C) overstating liabilities. 
D) understating assets.

Question 5

Getting a bonus is a(n)____________ reward and getting satisfaction from one's own performance is a(n)____________ reward.

Accepted Answer

A) intrinsic,extrinsic 
B) extrinsic,intrinsic 
C) material,immaterial 
D) monetary,intangible 
A) intrinsic,extrinsic 
B) extrinsic,intrinsic 
C) material,immaterial 
D) monetary,intangible

Question 6

What happens when a company ties manager compensation to the company's stock performance?

Accepted Answer

A) It creates a significant amount of risk because of a lack of diversity since the performance indicator is based on just one stock - that of the company. 
B) It has the risk that a company's stock can fluctuate widely based on factors over which the manager has no control. 
C) It is accomplished through issuing stock options which shields some of risk. 
D) All of the answers are correct. 
A) It creates a significant amount of risk because of a lack of diversity since the performance indicator is based on just one stock - that of the company. 
B) It has the risk that a company's stock can fluctuate widely based on factors over which the manager has no control. 
C) It is accomplished through issuing stock options which shields some of risk. 
D) All of the answers are correct.

Question 7

Describe two types of common financial fraud.

Accepted Answer

Two types of common

Question 8

What is true concerning companies that use absolute performance evaluations?

Accepted Answer

A) Divisional performance is compared with that of other divisions in the same industry. 
B) Managers are shielded from the risk of managing a division in a poorly performing industry. 
C) Incentives are provided for managers to move out of low-performing to high-performing industries. 
D) Managers are forced to seek,new,more profitable opportunities. 
A) Divisional performance is compared with that of other divisions in the same industry. 
B) Managers are shielded from the risk of managing a division in a poorly performing industry. 
C) Incentives are provided for managers to move out of low-performing to high-performing industries. 
D) Managers are forced to seek,new,more profitable opportunities.

Question 9

The presence of the independent auditors and their review of a company's internal controls

Accepted Answer

A) encourages collusion. 
B) encourages consolidation of duties and responsibilities. 
C) helps to prevent fraud. 
D) totally prevent fraud. 
A) encourages collusion. 
B) encourages consolidation of duties and responsibilities. 
C) helps to prevent fraud. 
D) totally prevent fraud.

Question 10

High-pressure performance evaluation systems designed to meet the demands of stockholders,the expectation of financial analysts,or managements' egos

Accepted Answer

A) will not motivate employees. 
B) may not create incentives to commit fraudulent financial reporting. 
C) may increase the present value of a company's tax payments. 
D) All of the answers are correct. 
A) will not motivate employees. 
B) may not create incentives to commit fraudulent financial reporting. 
C) may increase the present value of a company's tax payments. 
D) All of the answers are correct.

Question 11

What is true concerning internal auditors?

Accepted Answer

A) Internal auditors can not deter nor detect fraud. 
B) Internal auditors can deter but not detect fraud. 
C) Internal auditors can not deter but can detect fraud. 
D) Internal auditors can both deter and detect fraud. 
A) Internal auditors can not deter nor detect fraud. 
B) Internal auditors can deter but not detect fraud. 
C) Internal auditors can not deter but can detect fraud. 
D) Internal auditors can both deter and detect fraud.

Question 12

The expectancy view of motivation recommends

Accepted Answer

A) improving performance evaluation processes. 
B) providing a high probability that behaving as the organization wishes will lead to rewards. 
C) creating incentive plans that include stock options. 
D) both a and b above. 
A) improving performance evaluation processes. 
B) providing a high probability that behaving as the organization wishes will lead to rewards. 
C) creating incentive plans that include stock options. 
D) both a and b above.

Question 13

Treadway Commission
The 1987 recommendations of the Treadway Commission focused on publicly held companies.For each area listed below,explain how a company can improve its overall financial reporting process,increase the likelihood of preventing fraudulent financial reporting,and detect it earlier when it occurs.
Refer to the Treadway Commission.Explain what the Treadway Commission means by the "tone at the top."

Accepted Answer

The tone set by top management influence

Question 14

Effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth.Why are special awards given?

Accepted Answer

A) to improve short-term performance. 
B) as a long-term incentive. 
C) for particular actions or extraordinary performance. 
D) None of the answers is correct. 
A) to improve short-term performance. 
B) as a long-term incentive. 
C) for particular actions or extraordinary performance. 
D) None of the answers is correct.

Question 15

How do environmental conditions influence fraudulent conduct?

Accepted Answer

The tone at the top-the environment top

Question 16

The theory of motivation which deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors is called

Accepted Answer

A) agency theory. 
B) principal theory. 
C) expectancy theory. 
D) traditional theory. 
A) agency theory. 
B) principal theory. 
C) expectancy theory. 
D) traditional theory.

Question 17

Explain the internal auditor's general role in detecting errors and irregularities.

Accepted Answer

The internal auditor's general role in d

Question 18

According to the agency theory of motivation,which of the following are agency costs?

Accepted Answer

A) the costs incurred by agents to control principal's actions. 
B) the costs to the agents if principals pursue interests that are not in the interests of the agents. 
C) rewards,penalties,monitoring devices,and audits. 
D) All of the answers are correct. 
A) the costs incurred by agents to control principal's actions. 
B) the costs to the agents if principals pursue interests that are not in the interests of the agents. 
C) rewards,penalties,monitoring devices,and audits. 
D) All of the answers are correct.

Question 19

Which of the following are rewards that come from the individual,such as the satisfaction from studying hard,providing help to someone in need,or doing a good job?

Accepted Answer

A) extrinsic rewards. 
B) intrinsic rewards. 
C) self rewards. 
D) performance-based rewards. 
A) extrinsic rewards. 
B) intrinsic rewards. 
C) self rewards. 
D) performance-based rewards.

Question 20

Which of these are two common frauds in financial reporting?

Accepted Answer

A) understating revenues and overstating inventory. 
B) overstating revenues and overstating inventory. 
C) understating revenues and understating inventory. 
D) overstating revenues and understating inventory. 
A) understating revenues and overstating inventory. 
B) overstating revenues and overstating inventory. 
C) understating revenues and understating inventory. 
D) overstating revenues and understating inventory.

Describe the characteristics found to exist in most divisional incentive compensations plans.

Summarize the recommendations of the Treadway Commission.Explain the steps managers should take to reduce the possibility of fraudulent financial reporting.

Identify (a)the purpose of internal accounting controls and (b)the importance of record keeping.

Which of these is a common fraud in financial reporting?

Getting a bonus is a(n) reward and getting satisfaction from one's own performance is a(n) reward.

What happens when a company ties manager compensation to the company's stock performance?

Describe two types of common financial fraud.

What is true concerning companies that use absolute performance evaluations?

The presence of the independent auditors and their review of a company's internal controls

High-pressure performance evaluation systems designed to meet the demands of stockholders,the expectation of financial analysts,or managements' egos

What is true concerning internal auditors?

The expectancy view of motivation recommends

Effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth.Why are special awards given?

How do environmental conditions influence fraudulent conduct?

The theory of motivation which deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors is called

Explain the internal auditor's general role in detecting errors and irregularities.

According to the agency theory of motivation,which of the following are agency costs?

Which of the following are rewards that come from the individual,such as the satisfaction from studying hard,providing help to someone in need,or doing a good job?

Which of these are two common frauds in financial reporting?

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

Describe the characteristics found to exist in most divisional incentive compensations plans.

Summarize the recommendations of the Treadway Commission.Explain the steps managers should take to reduce the possibility of fraudulent financial reporting.

Identify (a)the purpose of internal accounting controls and (b)the importance of record keeping.

Which of these is a common fraud in financial reporting?

Getting a bonus is a(n)____________ reward and getting satisfaction from one's own performance is a(n)____________ reward.

What happens when a company ties manager compensation to the company's stock performance?

Describe two types of common financial fraud.

What is true concerning companies that use absolute performance evaluations?

The presence of the independent auditors and their review of a company's internal controls

High-pressure performance evaluation systems designed to meet the demands of stockholders,the expectation of financial analysts,or managements' egos

What is true concerning internal auditors?

The expectancy view of motivation recommends

Effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth.Why are special awards given?

How do environmental conditions influence fraudulent conduct?

The theory of motivation which deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors is called

Explain the internal auditor's general role in detecting errors and irregularities.

According to the agency theory of motivation,which of the following are agency costs?

Which of the following are rewards that come from the individual,such as the satisfaction from studying hard,providing help to someone in need,or doing a good job?

Which of these are two common frauds in financial reporting?

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

Getting a bonus is a(n) reward and getting satisfaction from one's own performance is a(n) reward.