Question 1

IFRS is considered a principles-based system, while U.S. GAAP is considered a rules-based system.

Accepted Answer

A) True 
 B)False  True

Question 2

Risk assessment:

Accepted Answer

A) is an ongoing process. 
B) identifies and analyzes risk. 
C) varies from company to company. 
D) includes all of the above. 
A) is an ongoing process. 
B) identifies and analyzes risk. 
C) varies from company to company. 
D) includes all of the above. D

Question 3

Bill works a minimum wage job. Due to a drug habit, he is always short on funds; additionally, he feels underpaid, and says to himself the the company owes him. Bill knows that the company has security cameras placed above each register, and will do surprise cash counts throughout each shift; therefore, because there is no __________, Bill is less likely to commit fraud.

Accepted Answer

A) perceived pressure 
B) rationalization 
C) perceived opportunity 
D) internal controls 
A) perceived pressure 
B) rationalization 
C) perceived opportunity 
D) internal controls C

Question 4

Granting customers a lower sales price for something that benefits you in return would be an example of a:

Accepted Answer

A) disbursement scheme. 
B) bribe or kickback. 
C) cash register scheme. 
D) check tampering scheme. 
A) disbursement scheme. 
B) bribe or kickback. 
C) cash register scheme. 
D) check tampering scheme.

Question 5

Ethical conduct refers to how society requires people to act.

Accepted Answer

A) True 
 B)False

Question 6

As it relates to accounting fraud, which of the following BEST describes "perceived pressure"?

Accepted Answer

A) An element of the fraud triangle in which the employee feels a need to obtain cash or other assets 
B) An element of the fraud triangle in which the employee justifies his or her actions 
C) An element of the fraud triangle in which the employee believes there is a chance to commit and conceal fraud 
D) Intentional misrepresentation of the financial statements 
A) An element of the fraud triangle in which the employee feels a need to obtain cash or other assets 
B) An element of the fraud triangle in which the employee justifies his or her actions 
C) An element of the fraud triangle in which the employee believes there is a chance to commit and conceal fraud 
D) Intentional misrepresentation of the financial statements

Question 7

Committing a fraud because of a drug habit or living beyond your means is an example of:

Accepted Answer

A) realization. 
B) perceived opportunity. 
C) rationalization. 
D) perceived pressure. 
A) realization. 
B) perceived opportunity. 
C) rationalization. 
D) perceived pressure.

Question 8

Under SOX, the Chief Executive Officer and Chief Financial Officer must sign off on:

Accepted Answer

A) all annual reports by the company. 
B) all quarterly reports by the company. 
C) all annual and quarterly reports by the company. 
D) the external auditor's opinion. 
A) all annual reports by the company. 
B) all quarterly reports by the company. 
C) all annual and quarterly reports by the company. 
D) the external auditor's opinion.

Question 9

Management and staff attitudes toward internal control are an important part of control activities.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would NOT be considered part of monitoring in an internal control system?

Accepted Answer

A) Having an audit trail 
B) Assessing performance of the system 
C) Locating weakness of the system 
D) Management involvement 
A) Having an audit trail 
B) Assessing performance of the system 
C) Locating weakness of the system 
D) Management involvement

Question 11

Book value reports the past while market value focuses on the future.

Accepted Answer

A) True 
 B)False

Question 12

The goal of overstating earnings by using fraud is to:

Accepted Answer

A) deflate the amount of taxes the corporation pays. 
B) overstate the cost of goods sold. 
C) help increase the stock price of the company. 
D) overstate receivables. 
A) deflate the amount of taxes the corporation pays. 
B) overstate the cost of goods sold. 
C) help increase the stock price of the company. 
D) overstate receivables.

Question 13

A qualified opinion is issued when which of the following occurs?

Accepted Answer

A) The auditors have taken exception to an accounting application. 
B) The auditors find the financial statements to be fairly presented in accordance with GAAP. 
C) The auditors were unable to gather the necessary information to issue a clean opinion. 
D) A and C are both instances when a qualified opinion is issued. 
A) The auditors have taken exception to an accounting application. 
B) The auditors find the financial statements to be fairly presented in accordance with GAAP. 
C) The auditors were unable to gather the necessary information to issue a clean opinion. 
D) A and C are both instances when a qualified opinion is issued.

Question 14

Contingent liabilities are ________ under GAAP, and ________ under IFRS I. Recorded if probable
II. Recorded if possible
III. Recorded if reasonably estimated

Accepted Answer

A) GAAP I and II; IFRS I or II 
B) GAAP I or III; IFRS I and II 
C) GAAP I; IFRS I and III 
D) GAAP I and III; IFRS I 
A) GAAP I and II; IFRS I or II 
B) GAAP I or III; IFRS I and II 
C) GAAP I; IFRS I and III 
D) GAAP I and III; IFRS I

Question 15

Overbilling the company for parking fees or cab fare would be examples of:

Accepted Answer

A) disbursement schemes. 
B) expense schemes. 
C) cash register schemes. 
D) check tampering schemes. 
A) disbursement schemes. 
B) expense schemes. 
C) cash register schemes. 
D) check tampering schemes.

Question 16

A distracted employee who fails to properly follow procedures is an example of:

Accepted Answer

A) the control environment. 
B) control activities. 
C) monitoring. 
D) internal control limitations. 
A) the control environment. 
B) control activities. 
C) monitoring. 
D) internal control limitations.

Question 17

When a company has one person post cash receipts, and another person deliver the deposit, this is an example of:

Accepted Answer

A) restricted access. 
B) proper authorization. 
C) separation of duties. 
D) internal control limitations. 
A) restricted access. 
B) proper authorization. 
C) separation of duties. 
D) internal control limitations.

Question 18

Which element of internal control deals with a company having large amounts of cash on hand?

Accepted Answer

A) Control environment 
B) Control activities 
C) Information and communication 
D) Risk assessment 
A) Control environment 
B) Control activities 
C) Information and communication 
D) Risk assessment

Question 19

Details that support business transactions make up what is called:

Accepted Answer

A) internal control. 
B) monitoring. 
C) risk assessment. 
D) an audit trail. 
A) internal control. 
B) monitoring. 
C) risk assessment. 
D) an audit trail.

Question 20

Another name for an "except for" audit opinion is a(n):

Accepted Answer

A) disclaimer of opinion. 
B) qualified opinion. 
C) adverse opinion. 
D) unqualified opinion. 
A) disclaimer of opinion. 
B) qualified opinion. 
C) adverse opinion. 
D) unqualified opinion.

IFRS is considered a principles-based system, while U.S. GAAP is considered a rules-based system.

Risk assessment:

Granting customers a lower sales price for something that benefits you in return would be an example of a:

Ethical conduct refers to how society requires people to act.

As it relates to accounting fraud, which of the following BEST describes "perceived pressure"?

Committing a fraud because of a drug habit or living beyond your means is an example of:

Under SOX, the Chief Executive Officer and Chief Financial Officer must sign off on:

Management and staff attitudes toward internal control are an important part of control activities.

Which of the following would NOT be considered part of monitoring in an internal control system?

Book value reports the past while market value focuses on the future.

The goal of overstating earnings by using fraud is to:

A qualified opinion is issued when which of the following occurs?

Contingent liabilities are under GAAP, and under IFRS I. Recorded if probable II. Recorded if possible III. Recorded if reasonably estimated

Overbilling the company for parking fees or cab fare would be examples of:

A distracted employee who fails to properly follow procedures is an example of:

When a company has one person post cash receipts, and another person deliver the deposit, this is an example of:

Which element of internal control deals with a company having large amounts of cash on hand?

Details that support business transactions make up what is called:

Another name for an "except for" audit opinion is a(n):

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 6: The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

IFRS is considered a principles-based system, while U.S. GAAP is considered a rules-based system.

Risk assessment:

Granting customers a lower sales price for something that benefits you in return would be an example of a:

Ethical conduct refers to how society requires people to act.

As it relates to accounting fraud, which of the following BEST describes "perceived pressure"?

Committing a fraud because of a drug habit or living beyond your means is an example of:

Under SOX, the Chief Executive Officer and Chief Financial Officer must sign off on:

Management and staff attitudes toward internal control are an important part of control activities.

Which of the following would NOT be considered part of monitoring in an internal control system?

Book value reports the past while market value focuses on the future.

The goal of overstating earnings by using fraud is to:

A qualified opinion is issued when which of the following occurs?

Contingent liabilities are ________ under GAAP, and ________ under IFRS I. Recorded if probable II. Recorded if possible III. Recorded if reasonably estimated

Overbilling the company for parking fees or cab fare would be examples of:

A distracted employee who fails to properly follow procedures is an example of:

When a company has one person post cash receipts, and another person deliver the deposit, this is an example of:

Which element of internal control deals with a company having large amounts of cash on hand?

Details that support business transactions make up what is called:

Another name for an "except for" audit opinion is a(n):

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Accounting for a Merchandising Business

Inventory

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

Filters

Contingent liabilities are under GAAP, and under IFRS I. Recorded if probable II. Recorded if possible III. Recorded if reasonably estimated