Please answer. Give proper solution

1. What differentiates fraud from an error?

a. Materiality.

b. Effect on misstatements.

c. Intent.

d. Frequency of occurrence .

2. The following are examples of error, except

a. A mistake in gathering or processing data from which financial statements are prepared.

b. An incorrect accounting estimate arising from oversight or misinterpretation of facts.

c. A mistake in the application of accounting principles relating to measurement, recognition, classification, presentation, or disclosure.

d. Misrepresentation in the financial statements of events, transaction or other significant information.

3. The risk of not detecting a material misstatement resulting from fraud is higher than the risk of not detecting a material misstatement resulting from error because

a. The effect of fraudulent act is likely omitted in the accounting records.

b. Fraud is ordinarily accompanied by acts specifically designed to conceal its existence, and auditors do not make legal determinations of whether fraud has actually occurred.

c. Fraud is always a result of connivance between or among employees.

d. The auditor is responsible to detect errors but not fraud.

Types of Fraud

4. The two types of intentional misstatements that are relevant to the auditor's consideration of fraud include, misstatements resulting from fraudulent financial reporting and misstatements resulting from misappropriation of assets. Fraudulent financial reporting least likely involve

a. Deception such as manipulation, falsification (including forgery), or alteration of accounting records or supporting documents from which the financial statements are prepared

b. Misrepresentation in, or intentional omission from, the financial statements of events, transaction or other significant information

c. Intentional misapplication of accounting principles relating to measurement, recognition, classification, presentation, or disclosure

d. Embezzling receipts, stealing physical assets or intellectual property, causing an entity to pay for goods and services not received, or using an entity's assets for personal use.

5. Which of the following constitutes the fraud of larceny?

a. Misappropriation of assets that have been entrusted to one's care

b. Theft of assets

c. Theft of assets covered up by manipulation of accounting records

d. Agreement between two or more persons to commit a criminal act

6. Who is most likely to perpetrate fraudulent financial reporting?

a. Members of the board of directors

b. Production employees

c. Management of the company

d. The internal auditors

7. Misappropriation of assets is normally perpetrated by:

a. members of the board of directors.

b. employees at lower levels of the organization.

c. management of the company.

d. the internal auditors.

8. In comparing management fraud with employee fraud, the auditor's risk of failing to discover the fraud is

a. Greater for employee fraud because of the higher crime rate among blue collar workers

b. Greater for management fraud because of management's ability to override existing internal controls that is always presumed to exist in an audit of financial statements.

c. Greater for employee fraud because of the larger number of employees in the organization

d. Greater for management fraud because managers are inherently smarter than employees

Responsibilities for Fraud

9. Which statement(s) is(are) incorrect regarding the auditor's responsibility to consider fraud and error in an audit of financial statements?

a. The auditor is not and cannot be held responsible for the prevention of fraud and error being the primary responsibility of both the management and those charged with governance.

b. When planning and performing audit procedures and evaluating and reporting the results thereof, the auditor should consider the risk of misstatements in the financial statements resulting from fraud.

c. In planning the audit, the auditor should discuss with other members of the audit team the susceptibility of the entity to material statements in the financial statements resulting from fraud or error and exercise professional skepticism, which is the best method of the auditor to detect fraud.

d. The auditor should design audit programs that will provide reasonable assurance that material errors and fraud will be detected in the ordinary course of the examination.

10. When comparing the auditor's responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility:

a. more on discovering errors than employee fraud.

b. more on discovering employee fraud than errors.

c. equally on discovering either one.

d. on the senior auditor for detecting errors and on the manager for detecting employee fraud.

January 1, 2014 at a cost of P10 million. The estimated

useful life is 10 years. On January 1, 2020, the power

train requires replacement, as further maintenance is

uneconomical due to the off-road time required. The

remainder of the vehicle is perfectly roadworthy and is

expected to last for the next four years. The cost of the

new power train is P4.5 million.

21. Assuming that the original cost of the power train is P3

million, the total depreciation expense in 2020 is

a. P2,200,000 c. P1,150,000

b. P1,825,000 d. P1,450,000

22. If an entity recognizes in the carrying amount of an

item of property, plant and equipment the cost of a

replacement for part of the item, then it derecognizes

the carrying amount of the replaced part

a. If the replaced part had been depreciated

separately.

b. If the asset is depreciated using components

depreciation.

c. If it is practicable for an entity to determine the

carrying amount of the replaced part.

d. Regardless of whether the replaced part had been

depreciated separately.

23. Assuming that the original cost of the power train is

not separately identifiable and the appropriate discount

rate is 5% (the present value of 1 at 5% for 6 years is

0.7462), the total depreciation expense in 2020 is

a. P1,000,000 c. P2,934,362

b. P2,500,000 d. P1,789,210