The flashcards below were created by user
hsafcik8
on FreezingBlue Flashcards.
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fraud auditors should be equally concerned with liabilities being overstated as well as understated
True
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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
True
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confirnations with vendors are an effective way to discover unrecorded liabilities
True
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accrued liabiliteis are important accounts to look at when searching for fraud because it is easy to understate liabilities in these accounts
True
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symptoms of unrecorded contingent liabilities can be found by performing analytical procedures on certain FS ratios
False
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some misleading footnotes have no effect on Fs balances
True
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understatement of liability fraud is ususally more difficult to find than overstatement of asset fraud
True
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when searching for unrecorded liabilities, investigating vendors with zero balances would be just as important as investigating vendors with large balances
True
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assets most often improperly capitalized are fixed assets such as property or equipment
False
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FS fraud involving footnote disclosures can be either frauds of omission or frauds of commission
False
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a company that claims to be something it is not in a 10-K report is committing a kind of FS fraud
True
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FS frauds most often occur in large, well-established companies
False
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Documentary symptoms provide the best opportunity to find contingent liabilities that should be recorded
False
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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
False
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one of the best ways to detect inappropriate capitalization of costs is by making comparisons with other similar companies
True
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comparing cash and marketable securities balances with those of similar companies is usually very helpful when looking for analytical symptoms
False
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Which of the following is a primary typedd of transaction that can create liabilities for a company?
e. all of the above
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when AP related liabilities are understated, purchases and inventory are ofted [blank], or the FS don't balance
b. understated
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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
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the most common fraud involving car companies and the warranties they offer would most likely be:
c. not recording or underrrecordign future obligations
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FAs 5 requires contingent liabilities to be recorded as liabilities on teh BS if teh likelihood of loss or payment is:
c. probable
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analytical symptoms of AP fraud most often relate to reported "AP" balances that appear:
a. too low
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proactively searcing for analytical symptoms related to FS fraud menas that we are looking for accounts that appear
d. all of the above
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when focusing on changes, you should consider changes from period to period in:
d. both a and b
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overstating cash is usually difficult because:
a. cash balances can be easily confirmed with banks and other institutions
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inadequate disclosure fraud ususally involves:
c. both a and b
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when examining whether a company hs underrecorded AP, each of the following ratios is helpful except:
d. unearned revenue/AP
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each of the following is a symptom relating to understatment of liability frauds except:
a. original purchase related records where copies should exist
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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
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which of the following factors doe4s not make fraud more difficult to detect?
d. all of teh above make fraud more difficult to detect
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a form 1099 with missing withholdings (where they should be reported) may be a fraud symptom for which liability account?
d. Accrued liabilities
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In liabilitiy fraud, liabilities are most often:
a. understated
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Which of the following is usually the hardest fraud to detect?
d. disclosure fraud
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you observe that a company's current ratio is dramatically increasing. This may indicate fraud in that:
b. accounts payable is understated
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of the following, the most difficult account for mgmt to intentionally misstate is:
b. cash
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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)
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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
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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)
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