Multiple Choice Questions
1. To which of the following does fraud created by insider information period refer?
a. The time frame management has to correct fraudulent information disclosed.
b. The time frame within which insider trading is prohibited.
c. The time frame between the disclosure of fraudulent information and the information as corrected.
d. The time frame within which fraud is committed.
e. None of the above.

2. Which of the following is more likely to be involved with the financial statement fraud of a company?
a. The treasurer.
b. The chairman of the audit committee.
c. The chairman of the board of directors.
d. The CEO.
e. The largest shareholder.
f. All of the above are equally likely to be involved.

3. Who is more likely to be involved in the fraud of misappropriation of assets?
a. The CEO.
b. The largest shareholder.
c. The executive secretary.
d. The audit committee.
e. All of the above are equally likely to be involved.
f. None of the above.

4. Which of the following is an economic choice available to management?
a. Dividend policy.
This is a choice of the board of directors.
b. Deferral of expenses.
c. Nonpayment of lease obligations.
This isn’t really a legitimate choice.
d. Bonuses paid to upper level management.
This is the choice of the board of directors.
e. None of the above.

5. Which of the following type of company is least likely susceptible to fraud?
a. A company that has only cash sales.
b. A construction company that recognizes income by the percentage of completion method.
c. A calendar year company that conducts most of its business at year-end.
d. A company with an IT system developed and maintained by the auditors.
e. A company that maintains an inventory.
f. All of the above are equally likely.
g. None of the above.