(Multiple choice)
1. Overstating cash is usually difficult because:
a. Cash balances can be easily confirmed with banks and other financial institutions.
b. Cash is hard to steal.
c. Cash is normally not a fraudulent account.
d. Cash is usually a small asset.

2. Inadequate disclosure fraud usually involves:
a. Statements in the footnotes that are wrong but do not impact the financial statement.
b. Disclosures that should have been made in the footnotes but were not.
c. Both a and b.
d. Neither a nor b.

3. When examining whether a company has underrecorded accounts payable, each of the following ratios is helpful except:
a. Acid-test ratio.
b. Accounts payable/Purchases.
c. Accounts payable/Cost of goods sold.
d. Unearned revenue/Accounts payable.
e. Current ratio.

4. Each of the following is a symptom relating to understatement of liability frauds except:
a. Original purchase-related records where copies could exist.
b. Denied access to records, facilities, certain employees, customers, vendors, or others from whom audit evidence might be sought.
c. Last-minute adjustments by the entity that significantly affect financial results.
d. Missing documents.
e. All of the above are documentary symptoms of understatement of liability fraud.

5. Each of the following assets is correctly linked with how it can be overstated except:
a. Inventory can be overstated by improperly capitalizing these assets.
b. Marketable securities can be overstated because they are not widely traded, and it is difficult to assign an accurate value to the securities.
c. Fixed assets can be overstated by leaving expired assets on the books.
d. Assets can be inflated in mergers, acquisitions, and restructurings by having the wrong entity act as the acquirer.

6. Which of the following factors does not make fraud more difficult to detect?
a. Collusion with outsiders.
b. Forgery, which GAAS auditors are not routinely trained to detect.
c. Off-book frauds in which no records on the company's books are fraudulent.
d. All of the above make fraud more difficult to detect.

7. A form 1099 with missing withholdings (where they should be reported) may be a fraud symptom for which liability account?
a. Accounts Payable.
b. Unearned Revenues.
c. Contingent Liabilities.
d. Accrued Liabilities.