CFR Final Exam with all Correct & 100% Verified
Answers |Actual Complete Exam |Already Graded
A+ (Just Released)
Which of the following red flags were present in Enron's 2000 Form 10K?
A. "Cookie jar" reserves
B. Recognizing revenue on a bill-and-hold basis
C. Sales to SPEs under its price-risk management business ✔Correct Answer-C. Sales to SPEs
under its price-risk management business
During the period between 31 July 1997 to 30 July 2002, the most significant category of
enforcement actions by the SEC was improper:
A. Revenue recognition.
B. Accounting for business combinations
C. Accounting for foreign payments in violation of the Foreign Corrupt Practices Act ✔Correct
Answer-A. Revenue recognition
According to the Statement on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, which of the following most likely indicates a risk factor reflective of the
managements' attitudes that may allow them to rationalize accounting fraud?
A. New regulatory requirements
B. The dependence of managements' compensation upon meeting aggressive stock price
targets
C. Managements' repeated attempts to justify inappropriate accounting on the basis of
materiality ✔Correct Answer-C. Managements' repeated attempts to justify inappropriate
accounting on the basis of materiality
According to Statements on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, the three conditions that are generally present when fraud occurs (also known
as the "fraud triangle") are incentives that can lead to fraudulent reporting, opportunities to
commit fraud, and:
A. Poor firm financial performance
B. Rationalizations to justify behavior
C. Ineffective monitoring of managment ✔Correct Answer-B. Rationalizations to justify
behavior
, According to Statement on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, which of the following risk factors most likely represents an opportunity for
management to commit fraud?
A. Revenue estimates that are based on subjective judgments.
B. Excessive interest by management in increasing the stock price
C. Excessive competition in the industry resulting in declining margins ✔Correct Answer-A.
Revenue estimates that are based on subjective judgments
Providing information about the performance and financial position of companies so that users
can make economic decisions best describes the role of:
A. Auditing
B. Financial reporting
C. Financial statement analysis ✔Correct Answer-B. Financial reporting
U.S. Financial Accounting Standards are currently developed by which entity?
A. The United States Congress
B. The Financial Services Authority
C. The Financial Accounting Standards Board ✔Correct Answer-C. The Financial Accounting
Standards Board
The SEC requires which of the following be issued to shareholders before a shareholder
meeting?
A. Form 10-K
B. Statement of cash flow
C. Proxy statement ✔Correct Answer-C. Proxy statement
Which of the following is not a constraint on the financial statements according to the IFRS
Framework?
A. Timeliness
B. Understandability
C. Benefit versus cost ✔Correct Answer-B. Understandability
The assumption that the effects of transactions and other events are recognized when they
occur, not necessarily when cash movements occur, is called:
A. Accrual basis
B. Going concern
C. Relevance ✔Correct Answer-A. Accrual basis
Answers |Actual Complete Exam |Already Graded
A+ (Just Released)
Which of the following red flags were present in Enron's 2000 Form 10K?
A. "Cookie jar" reserves
B. Recognizing revenue on a bill-and-hold basis
C. Sales to SPEs under its price-risk management business ✔Correct Answer-C. Sales to SPEs
under its price-risk management business
During the period between 31 July 1997 to 30 July 2002, the most significant category of
enforcement actions by the SEC was improper:
A. Revenue recognition.
B. Accounting for business combinations
C. Accounting for foreign payments in violation of the Foreign Corrupt Practices Act ✔Correct
Answer-A. Revenue recognition
According to the Statement on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, which of the following most likely indicates a risk factor reflective of the
managements' attitudes that may allow them to rationalize accounting fraud?
A. New regulatory requirements
B. The dependence of managements' compensation upon meeting aggressive stock price
targets
C. Managements' repeated attempts to justify inappropriate accounting on the basis of
materiality ✔Correct Answer-C. Managements' repeated attempts to justify inappropriate
accounting on the basis of materiality
According to Statements on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, the three conditions that are generally present when fraud occurs (also known
as the "fraud triangle") are incentives that can lead to fraudulent reporting, opportunities to
commit fraud, and:
A. Poor firm financial performance
B. Rationalizations to justify behavior
C. Ineffective monitoring of managment ✔Correct Answer-B. Rationalizations to justify
behavior
, According to Statement on Auditing Standards No. 99, Considerations of Fraud in a Financial
Statement Audit, which of the following risk factors most likely represents an opportunity for
management to commit fraud?
A. Revenue estimates that are based on subjective judgments.
B. Excessive interest by management in increasing the stock price
C. Excessive competition in the industry resulting in declining margins ✔Correct Answer-A.
Revenue estimates that are based on subjective judgments
Providing information about the performance and financial position of companies so that users
can make economic decisions best describes the role of:
A. Auditing
B. Financial reporting
C. Financial statement analysis ✔Correct Answer-B. Financial reporting
U.S. Financial Accounting Standards are currently developed by which entity?
A. The United States Congress
B. The Financial Services Authority
C. The Financial Accounting Standards Board ✔Correct Answer-C. The Financial Accounting
Standards Board
The SEC requires which of the following be issued to shareholders before a shareholder
meeting?
A. Form 10-K
B. Statement of cash flow
C. Proxy statement ✔Correct Answer-C. Proxy statement
Which of the following is not a constraint on the financial statements according to the IFRS
Framework?
A. Timeliness
B. Understandability
C. Benefit versus cost ✔Correct Answer-B. Understandability
The assumption that the effects of transactions and other events are recognized when they
occur, not necessarily when cash movements occur, is called:
A. Accrual basis
B. Going concern
C. Relevance ✔Correct Answer-A. Accrual basis
