Name ______________________________________________________ ACG 2681 Chapter 8 Homework Select the best answer. 1) Which statement provides information about the cash receipts and payments of a business? a) Statement of Earnings b) Statement of Retained Earnings c) Balance Sheet d) Statement of Cash Flows 2) Which statement summarizes the profit-generating activities for a particular reporting period? a) Statement of Earnings b) Statement of Retained Earnings c) Balance Sheet d) Statement of Cash Flows 3) Interest Income and Dividend Income is part of Other Income. a) TRUE b) FALSE 4) A company's earnings quality is affected by its choice of accounting methods. a) TRUE b) FALSE 5) Pro-forma earnings are a) actual earnings b) required to be reported quarterly c) issued at management's discretion d) not an accounting item 6) The percentage of a company's assets owned by creditors is shown by the a) Current ratio b) Debt-to-Equity ratio c) Return on Total Assets d) Return on Sales 7) A single-step income statement is preferred by investors and creditors. a) TRUE b) FALSE 8) Which of the following is not part of the fraud triangle? a) prevention b) opportunity c) rationalization d) pressure 9) Which of the following in not an example of an error? a) expensing to a wrong account b) transposing numbers c) reporting assets at fair market value instead of historical cost d) overriding internal controls 10) Who is usually responsible for the misappropriation of assets? a) employees b) management c) customers d) all of the above 11) Which of the following affect people and can increase the incidence of errors? a) demands b) conflicts c) time constraints d) all of the above e) none of the above 12) Journal entries proposed by managers should be approved by the CFO or other executive. a) TRUE b) FALSE 13) Internal auditors are a part of the accounting process. a) TRUE b) FALSE 14) Management is usually the one overriding internal controls. a) TRUE b) FALSE 15) Risk that addresses obtaining revenues and assets by fraudulent means. a) operational b) compliance c) situational d) moral 16) The methods and strategies used to stop those not deterred from succeeding in committing fraud. a) fraud deterrence b) fraud prevention c) fraud detection d) management 17) What is the acronym for the elements of fraud? a) FRAUD b) THEFT c) MIRD d) DDP 18) Fraud is the intentionally deceptive acts that result in another party losing something. a) TRUE b) FALSE 19) False statements are unknowingly making fraudulent statements. a) TRUE b) FALSE 20) The tasks/barriers designed to discourage those with a temptation to commit fraud. a) fraud deterrence b) fraud prevention c) fraud detection d) management 21) A system of ethics by which acts are judged within their contexts instead of by categorical principles. a) relativism b) situational c) operational d) human 22) A technique used to generate ideas on a particular topic. a) detection b) rationalization c) corruption d) brainstorming 23) The methodologies deployed to investigate fraud. a) fraud deterrence b) fraud prevention c) fraud detection d) management 24) A nonsharable need a) pressure b) rationalization c) opportunity d) human trait 25) Which of the following is a fraud concern? a) the use of aggressive accounting techniques b) financial statement with omissions c) manipulation of an organization's earnings d) all of the above 26) Moral relativism is an individual's belief as to whether something is right or not. a) TRUE b) FALSE 27) Which of the following is not a trait of a successful fraudster? a) passion b) patience c) precision d) planning 28) The direct and indirect cash flow methods can both be used to detect fraud. a) TRUE b) FALSE 29) Which of the following is a risk factor that leads to organizational failures? a) Good communication b) Effective board of directors c) A stable organizational culture d) Poor leadership 30) The auditor's job is not to detect fraud but to assist organizations that are developing adequate internal controls to prevent fraud by testing the management implemented controls. a) TRUE b) FALSE 31) An environment ripe for fraud includes a) good control and monitoring of management b) complex projects c) ethical tone from the top down d) effective internal audit department 32) Which of the following questions will NOT help detect a fraudster? a) Are inventory levels increasing? b) Is the company easily acquiring credit in a difficult economy? c) Is debt decreasing? d) Are bad situations being "swept under the rug"? 33) Errors and fraud are both intentional acts; they are the same. a) TRUE b) FALSE 34) Cash frauds are the easiest frauds to detect and prove. a) TRUE b) FALSE 35) Small frauds include a) taking office supplies home for personal use b) overcharging customers c) charging personal expenses to business accounts d) all of the above e) none of the above 36) Which of the following is cash fraud scheme a) fictitious sales b) giving unauthorized discounts c) skimming cash d) all of the above e) none of the above 37) The accounts receivable clerk could commit fraud by a) reporting fictitious sales b) not properly doing bank reconciliations c) writing off accounts d) all of the above 38) Register scams include all of the following except a) skimming b) writing off accounts c) false voids d) false refunds 39) Control over cash disbursements is improved by all except a) securing blank checks b) requiring two signatures on large expenditures c) having management control petty cash d) using prenumbered vouchers and checks 40) Control over cash payments is improved by all except a) trusting your employees b) bonding employees c) using cameras over collection sites d) doing background checks 41) Establishment of responsibility, segregation of duties, and independent verification are principles of internal control. a) TRUE b) FALSE 42) Physical controls do NOT include a) safes and vaults b) alarms to prevent break-ins c) locked warehouses d) fingerprint and eyeball scans to access computer facilities 43) Which of the following should not be limitation of internal control a) management b) humans c) business size d) costs should not exceed benefit 44) Which of the following would be included in inventory? a) Goods held on consignment for another b) Goods shipped today FOB shipping point to a customer c) Goods sold but not yet shipped d) Goods purchased FOB destination but not yet received 45) Which of the following is not a type of embezzlement? a) siphoning b) falsification of overtime records c) flapping d) adding non-employees to payroll e) kick-backs