MGMT 642 Chapter 13

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MGMT 642 Chapter 13
2010-12-09 14:15:24


642 - 13
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  1. fraud auditors should be equally concerned with liabilities being overstated as well as understated
  2. proactive searching for analytical symptoms means taht we are looking for accounts that appear too high or too low or that are unusual in some other way
  3. confirnations with vendors are an effective way to discover unrecorded liabilities
  4. accrued liabiliteis are important accounts to look at when searching for fraud because it is easy to understate liabilities in these accounts
  5. symptoms of unrecorded contingent liabilities can be found by performing analytical procedures on certain FS ratios
  6. some misleading footnotes have no effect on Fs balances
  7. understatement of liability fraud is ususally more difficult to find than overstatement of asset fraud
  8. when searching for unrecorded liabilities, investigating vendors with zero balances would be just as important as investigating vendors with large balances
  9. assets most often improperly capitalized are fixed assets such as property or equipment
  10. FS fraud involving footnote disclosures can be either frauds of omission or frauds of commission
  11. a company that claims to be something it is not in a 10-K report is committing a kind of FS fraud
  12. FS frauds most often occur in large, well-established companies
  13. Documentary symptoms provide the best opportunity to find contingent liabilities that should be recorded
  14. comparing financial relationships such as interest expense and debt, or the amount of warranty expense as a percentage of sales, is not helpful in identifying fraud symptoms of understateing liabilities
  15. one of the best ways to detect inappropriate capitalization of costs is by making comparisons with other similar companies
  16. comparing cash and marketable securities balances with those of similar companies is usually very helpful when looking for analytical symptoms
  17. Which of the following is a primary typedd of transaction that can create liabilities for a company?
    e. all of the above
  18. when AP related liabilities are understated, purchases and inventory are ofted [blank], or the FS don't balance
    b. understated
  19. recognizing something as a revenue instead of as a liability has a positive effect on the reported FS because:
    f. a, b and c are correct
  20. the most common fraud involving car companies and the warranties they offer would most likely be:
    c. not recording or underrrecordign future obligations
  21. FAs 5 requires contingent liabilities to be recorded as liabilities on teh BS if teh likelihood of loss or payment is:
    c. probable
  22. analytical symptoms of AP fraud most often relate to reported "AP" balances that appear:
    a. too low
  23. proactively searcing for analytical symptoms related to FS fraud menas that we are looking for accounts that appear
    d. all of the above
  24. when focusing on changes, you should consider changes from period to period in:
    d. both a and b
  25. overstating cash is usually difficult because:
    a. cash balances can be easily confirmed with banks and other institutions
  26. inadequate disclosure fraud ususally involves:
    c. both a and b
  27. when examining whether a company hs underrecorded AP, each of the following ratios is helpful except:
    d. unearned revenue/AP
  28. each of the following is a symptom relating to understatment of liability frauds except:
    a. original purchase related records where copies should exist
  29. 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
  30. which of the following factors doe4s not make fraud more difficult to detect?
    d. all of teh above make fraud more difficult to detect
  31. a form 1099 with missing withholdings (where they should be reported) may be a fraud symptom for which liability account?
    d. Accrued liabilities
  32. In liabilitiy fraud, liabilities are most often:
    a. understated
  33. Which of the following is usually the hardest fraud to detect?
    d. disclosure fraud
  34. you observe that a company's current ratio is dramatically increasing. This may indicate fraud in that:
    b. accounts payable is understated
  35. of the following, the most difficult account for mgmt to intentionally misstate is:
    b. cash
  36. which of teh following is not a way to underrrecord liabilities
    d. all of teh above are way to underrecord liabilities (borrowing but not disclosing, claiming debt has been forgiven, not recording loans)
  37. when looking for accounting or documentary symptoms of fraud when a merger occurs, one of the first steps should be:
    d. make sure that the accounting methods used were appropriate and consistent with accounting standards
  38. which of the following is a good place to look for inadequate disclosures?
    e. all of the above (board of directors minutes, correspondence and invoices from attorneys, confirmations with banks, loan agreements)