WGU C254 Topic 6 Exam 2026 Questions
and Answers
Which of the following is a transaction that creates real liabilities for a company?
a. Co-signing on a loan as a secondary signee.
b. Collecting cash prior to the performance of a service.
c. None of the above. - Correct answer-Collecting cash prior to the performance of
a service
When accounts payable-related liabilities are understated, purchase and inventory
are often ___________. - Correct answer-Understated
Which of the following types of fraud symptoms usually provides the best
opportunity to find contingent liabilities that should be recorded?
a. Analytical Symptoms
b. Documentary Symptoms
d. Lifestyle Symptoms
e. Tips and Complaints - Correct answer-Documentary Symptoms
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, Recognizing unearned revenue as earned revenue is an example of what type of
fraud? - Correct answer-Understatement of Liability Fraud
When examining whether a company has understated accounts payable, which of
the following ratios will be most helpful? - Correct answer-Accounts Payable/Cost
of Goods Sold
All of the following are common methods to commit understatement of liability
fraud, except:
a. Understate accounts payable.
b. Over-recording future obligations.
c. Recognizing unearned revenue as earned revenue.
d. Understate accrued liabilities. - Correct answer-Over-recording future
obligations
True or False
Detection of financial statement fraud can be seen on a spectrum of difficulty, one
extreme being "easy-to-detect" and the other extreme being "probably could-not-
have-been-detected-by-any-auditor?" - Correct answer-True
Which of the following does not increase the difficulty of detecting fraud (from an
auditor's point of view)?
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and Answers
Which of the following is a transaction that creates real liabilities for a company?
a. Co-signing on a loan as a secondary signee.
b. Collecting cash prior to the performance of a service.
c. None of the above. - Correct answer-Collecting cash prior to the performance of
a service
When accounts payable-related liabilities are understated, purchase and inventory
are often ___________. - Correct answer-Understated
Which of the following types of fraud symptoms usually provides the best
opportunity to find contingent liabilities that should be recorded?
a. Analytical Symptoms
b. Documentary Symptoms
d. Lifestyle Symptoms
e. Tips and Complaints - Correct answer-Documentary Symptoms
©COPYRIGHT 2025, ALL RIGHTS RESERVE 1
, Recognizing unearned revenue as earned revenue is an example of what type of
fraud? - Correct answer-Understatement of Liability Fraud
When examining whether a company has understated accounts payable, which of
the following ratios will be most helpful? - Correct answer-Accounts Payable/Cost
of Goods Sold
All of the following are common methods to commit understatement of liability
fraud, except:
a. Understate accounts payable.
b. Over-recording future obligations.
c. Recognizing unearned revenue as earned revenue.
d. Understate accrued liabilities. - Correct answer-Over-recording future
obligations
True or False
Detection of financial statement fraud can be seen on a spectrum of difficulty, one
extreme being "easy-to-detect" and the other extreme being "probably could-not-
have-been-detected-by-any-auditor?" - Correct answer-True
Which of the following does not increase the difficulty of detecting fraud (from an
auditor's point of view)?
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