ac574 final exm
Grade Details 1. Question:
(TCO A) Which statement is false?
Your Answer:
The Public Oversight Board was an independent private sector
body created in 1977.
The Public Oversight Board's report recommended a number of
forensic techniques to be included in audits.
The Public Oversight Board's report occurred after the issuance CORRECT
of SAS No. 99. ANSWER
The Public Oversight Board's report suggested converting a
traditional audit to a "fraud audit."
All of the above are true. INCORRECT
Instructor Explanation: Chapter 1, page 1-12 - report issued in 2000 Points Received: 0 of
4 2. Question:
(TCO A) Peremptory refers to:
Your Answer:
Be there first. CORRECT
Not requiring any cause to be shown.
One who strives to be the best.
Take the place of.
None of the above.
Instructor Explanation: Chapter 1, page 1-4. Points Received: 4 of 4 3. Question:
(TCO A) Which organization or group controls forensic accounting?
Your Answer:
ACFEI.
Association of Certified Fraud Specialists.
ACFE.
NACVA.
None of the above. CORRECT
Instructor Explanation: Chapter 2, page 2-14. None of the current certification groups have
been able to control forensic accountants. To an extent, forensic accounting is business's orphan,
being pushed and pulled by the accounting, economics, finance, and valuation professions.
Points Received: 4 of 4 4. Question:
(TCO A) Which statement is false?
Your Answer:
The flexibility in GAAP gives management discretion to use its
professional opinion to choose from a range of guidelines and
standards in selecting those that suit the needs of a company
(e.g., FIFO or LIFO inventory methods).
Nonfraudulent earnings management is accomplished within the
GAAP framework.
Fraudulent earnings management does not follow GAAP.
CORRECT
Transparency is one of the five interrelated components of internal
controls. ANSWER
All of the above are true. INCORRECT
Instructor Explanation: Chapter 3, page 3-28. Points Received: 0 of 4 5. Question:
(TCO A) Control risk is:
Your Answer:
, ac574 final exm
A risk that a material error in the balance or transaction class will not be
prevented or detected.
CORRECT
The risk that an account or transactions contain material misstatements
before the effects or the controls.
The measure of whet her s omething is significant enough to c hange an
investor's investment decision is a prime consideration in how the audit
is conducted.
The risk that audit procedures will not turn up material error when it
exists.
None of the above.
Instructor Explanation: Chapter 4, page 4-4. Points Received: 4 of 4 6. Question:
(TCO A) Horizontal analysis typically involves what?
Your Answer:
Comparison of companies by market share in the industry.
Comparison of cash value at a predictable moment in liquidity.
Comparison of year-to-year changes in financial statements. CORRECT
Comparison of organizational structure best suited for a planned
business venture.
Both a and b.
Instructor Explanation: Chapter 4, page 4-40. Points Received: 4 of 4 7. Question:
(TCO A) Given these facts, compute inventory turnover:
Total Assets $10,000,000
Cost of Goods Sold 2,200,000
Average Inventory 1,300,000
Interest Expense 850,000
Your Answer:
.59.
1.69. CORRECT
2.59.
7.69.
Not enough information is given.
Instructor Explanation: Chapter 4, page 4-42.
Inventory Turnover = Cost of goods sold/Average inventory = $2.2 mil/1.3 mil = 1.69
Points Received: 4 of 4 8. Question:
(TCO B) What audit step would be most appropriate for finding accounts receivables fraud?
Your Answer:
A bank reconciliation audit.
Gross profit analysis.
Reviewing customer complaints. CORRECT ANSWER
Surprise cash counts.
All of the above. INCORRECT
Instructor Explanation: Chapter 5, page 5-14. Points Received: 0 of 4 9. Question:
(TCO B) Which is a unique factor for solving a white-collar crime?
Your Answer:
Tracing of assets. CORRECT ANSWER
Availability of witnesses.
Desires of victims.
Financial losses.
Grade Details 1. Question:
(TCO A) Which statement is false?
Your Answer:
The Public Oversight Board was an independent private sector
body created in 1977.
The Public Oversight Board's report recommended a number of
forensic techniques to be included in audits.
The Public Oversight Board's report occurred after the issuance CORRECT
of SAS No. 99. ANSWER
The Public Oversight Board's report suggested converting a
traditional audit to a "fraud audit."
All of the above are true. INCORRECT
Instructor Explanation: Chapter 1, page 1-12 - report issued in 2000 Points Received: 0 of
4 2. Question:
(TCO A) Peremptory refers to:
Your Answer:
Be there first. CORRECT
Not requiring any cause to be shown.
One who strives to be the best.
Take the place of.
None of the above.
Instructor Explanation: Chapter 1, page 1-4. Points Received: 4 of 4 3. Question:
(TCO A) Which organization or group controls forensic accounting?
Your Answer:
ACFEI.
Association of Certified Fraud Specialists.
ACFE.
NACVA.
None of the above. CORRECT
Instructor Explanation: Chapter 2, page 2-14. None of the current certification groups have
been able to control forensic accountants. To an extent, forensic accounting is business's orphan,
being pushed and pulled by the accounting, economics, finance, and valuation professions.
Points Received: 4 of 4 4. Question:
(TCO A) Which statement is false?
Your Answer:
The flexibility in GAAP gives management discretion to use its
professional opinion to choose from a range of guidelines and
standards in selecting those that suit the needs of a company
(e.g., FIFO or LIFO inventory methods).
Nonfraudulent earnings management is accomplished within the
GAAP framework.
Fraudulent earnings management does not follow GAAP.
CORRECT
Transparency is one of the five interrelated components of internal
controls. ANSWER
All of the above are true. INCORRECT
Instructor Explanation: Chapter 3, page 3-28. Points Received: 0 of 4 5. Question:
(TCO A) Control risk is:
Your Answer:
, ac574 final exm
A risk that a material error in the balance or transaction class will not be
prevented or detected.
CORRECT
The risk that an account or transactions contain material misstatements
before the effects or the controls.
The measure of whet her s omething is significant enough to c hange an
investor's investment decision is a prime consideration in how the audit
is conducted.
The risk that audit procedures will not turn up material error when it
exists.
None of the above.
Instructor Explanation: Chapter 4, page 4-4. Points Received: 4 of 4 6. Question:
(TCO A) Horizontal analysis typically involves what?
Your Answer:
Comparison of companies by market share in the industry.
Comparison of cash value at a predictable moment in liquidity.
Comparison of year-to-year changes in financial statements. CORRECT
Comparison of organizational structure best suited for a planned
business venture.
Both a and b.
Instructor Explanation: Chapter 4, page 4-40. Points Received: 4 of 4 7. Question:
(TCO A) Given these facts, compute inventory turnover:
Total Assets $10,000,000
Cost of Goods Sold 2,200,000
Average Inventory 1,300,000
Interest Expense 850,000
Your Answer:
.59.
1.69. CORRECT
2.59.
7.69.
Not enough information is given.
Instructor Explanation: Chapter 4, page 4-42.
Inventory Turnover = Cost of goods sold/Average inventory = $2.2 mil/1.3 mil = 1.69
Points Received: 4 of 4 8. Question:
(TCO B) What audit step would be most appropriate for finding accounts receivables fraud?
Your Answer:
A bank reconciliation audit.
Gross profit analysis.
Reviewing customer complaints. CORRECT ANSWER
Surprise cash counts.
All of the above. INCORRECT
Instructor Explanation: Chapter 5, page 5-14. Points Received: 0 of 4 9. Question:
(TCO B) Which is a unique factor for solving a white-collar crime?
Your Answer:
Tracing of assets. CORRECT ANSWER
Availability of witnesses.
Desires of victims.
Financial losses.
