accounting homework assignment MCQS

Additional Requirements

Level of Detail: Show all work
Other Requirements: Question 1

Check tampering is unique from other fraudulent disbursement schemes because in a check tampering scheme:

The perpetrator physically prepares the fraudulent check.

The perpetrator must have access to a signature stamp in order to conceal the crime.

The perpetrator submits a phony document in order to generate the fraudulent payment.

The perpetrator must endorse the check in order to cash it.
2.5 points
Question 2

The most effective method if preventing an individual from adding fictitious employees to a company's payroll records is:

Segregation of duties.

Bank reconciliation.

Use of dual control.

Authorized check signer.
2.5 points
Question 3

The two most common ways that commissions may be fraudulently increased are:

Skimming and theft of non cash assets.

Larceny and bribing.

False sales and increasing the rate of the commission.

Misuse of non cash assets and shorting company purchases.
2.5 points
Question 4

Which of the following is NOT something the fraud examiner would do to see if a salesman is inflating their commission?

Compare the salesman's commissions to those of other salesmen.

Compare the rate of commission to personnel or company policy.

Examine checks for forged endorsements.

Verify sales with customers.
2.5 points
Question 5

Which of the following is not a strong control for protecting blank checks?

Blank checks should be kept under lock and key.

The key to the blank checks should be closely guarded.

Access to computer generated check software should be controlled by password.

Blank check should be under the control of the cashier.
2.5 points
Question 6

Which of the following is the main reason why the fraudster may be detected in a scheme where an outgoing check made out to a third party is stolen by the fraudster?

The inventory will be overstated.

The bank account will not be able to be properly reconciled.

The third party will question why they haven't received the check.

The forged endorsement may be detected by the bank.
2.5 points
Question 7

Which of the following is not a way to prevent employees from charging their personal expenses to the company?

Insure that checks are signed by an authorized signer.

Require detailed expense reports for all reimbursable expenses.

All reimbursed expenses should be reviewed by an employees immediate supervisor.

Incorporate a policy that clearly explains what types of expenses are reimbursable.
2.5 points
Question 8

Which of the following is a method to detect expense reimbursement fraud?

Establishment of travel and entertainment budgets and examination of variances.

Completing a monthly bank reconciliation.

Use of an authorized check signer.

Insuring that all blank checks are adequately secured.
2.5 points
Question 9

Which of the following is not a control that is used to prevent/detect expenses being paid more than once?

Require only original receipts; no photocopies.

Completing a monthly bank reconciliation.

All reimbursed expenses should be reviewed by an employee's immediate supervisor.

Use of a computer check that will identify like invoice numbers and amounts.
2.5 points
Question 10

A register disbursement false refund scheme normally causes inventory shrinkage because:

The item stolen must be destroyed.

The fraudster will continue the theft until caught.

The item is returned to the inventory on the books only.

The item is physically returned to the inventory.
2.5 points
Question 11

Which of the following is false?

Employees sometimes create fictitious sales to justify the shipment of merchandise, steal the merchandise and then write off the sale.

Employees may designate inventory as damaged and then steal it when it is written off.

Employees may record sales to dormant customer accounts, steal the merchandise and then write off the sale.

A comparison of the sales register to the shipment register will not identify inventory that was fraudulently shipped without a corresponding sale.
2.5 points
Question 12

If an employee generates a much higher percentage of uncollected sales than his coworkers, what type of scheme might he be committing?

Accounts receivable skimming

Commission scheme

Multiple reimbursement scheme

Shell company scheme
2.5 points
Question 13

To successfully carry out and conceal a check tampering scheme, the fraudster must have:

Access to checks.

Access to the bank statements.

The ability to forge signatures or alter other information on the check.

All of the above.
2.5 points
Question 14

To safeguard against ghost employee schemes, the person in charge of entering new employees in the payroll system should also distribute the paychecks so that he can look for payments to unauthorized employees.

True

False


2.5 points
Question 15

If a fraudster fails to remove a terminated employee from the payroll and collects the
former employee's fraudulent paychecks, he/she is committing a:

Payroll larceny scheme.

Falsified hours and salary scheme.

Forged endorsement scheme.

Ghost employee scheme.
2.5 points
Question 16

Which of the following controls will help prevent falsified hours and salary schemes?

The duties of payroll preparation, authorization, and distribution are segregated.

Sick leave and vacation time are monitored for excesses by the payroll department.

Supervisors return authorized timecards to the employees for review before they are sent to the payroll department.

All of the above .
2.5 points
Question 17

Which of the following procedures can be used to prevent mischaracterized expense reimbursement schemes?

A policy should be established and communicated to employees regarding what types of expenses will and will not be reimbursed.

Employees should be required to sign their expense reports before being reimbursed.

The internal audit department should review all expense reports under a certain dollar amount.

None of the above.
2.5 points
Question 18

Which of the following procedures can be used to detect mischaracterized expense reimbursement schemes?

Compare the dates of claimed reimbursable business expenses to the employees work schedules.

On company credit card statements, extract charges with SIC codes that are normally associated with personal purchases.

Compare current expense reimbursement levels to prior years and budgeted amounts.

All of the above.
2.5 points
Question 19

Which of the following is not considered a red flag of a fictitious expense reimbursement scheme?

An employee repeatedly uses the company credit card for travel expenses.

An employee's reimbursement requests are always for round-dollar amounts.

An employee submits reimbursement requests that consistently fall just below the reimbursement limit.

An employee frequently requests reimbursement for high-dollar items that he claims were paid for in cash.
2.5 points
Question 20

To safeguard against expense reimbursement schemes, organizations should require that employee expense reports be reviewed and approved by a supervisor outside the requestor's department.

True

False


2.5 points
Question 21

ter disbursement schemes are different from skimming and larceny at the register in that they:

Are on-book schemes, where as skimming and larceny are off-book schemes.

Require the use of an accomplice.

Leave a record of the removal of money on the register tape.

All of the above.
2.5 points
Question 22

Which of the following is a type of register disbursement scheme?

Fictitious refunds.

Overstated refunds.

False voids.

All of the above.
2.5 points
Question 23

When an employee perpetrates a credit card refund scheme, the perpetual inventory will show a greater amount than the physical inventory.

True

False


2.5 points
Question 24

An excessive number of reversing sales transactions at the register is an indicator of which of the following schemes?

Skimming.

ter disbursement.

Pass-through scheme.

Multiple reimbursements.
2.5 points
Question 25

ter disbursement schemes are difficult to conceal because they cause the cash drawer to be out of balance with the cash register tape.

True

False


2.5 points
Question 26

Which of the following can be used to conceal a false refund scheme?

Destroying register tapes.

Issuing refunds below the review limit.

Forcing inventory totals.

All of the above.
2.5 points
Question 27

To safeguard against false voids schemes, companies should require a copy of the customer's receipt from the initial purchase as documentation for voided sales.

True

False


2.5 points
Question 28

To prevent fraudulent shipments of merchandise organizations should match every outgoing shipment to a sales order.
True
False
2.5 points
Question 29

Which of the following methods can be used to conceal inventory shrinkage on a company's books?

Creating fictitious sales and receivables.

Writing off inventory as obsolete.

Physical padding.

All of the above.
2.5 points
Question 30

An unexplained increase in uncollectible accounts receivable may be a warning sign of a non-cash asset misappropriation scheme involving false shipments of inventory.

True

False


2.5 points
Question 31

Running a computer program that identifies shipping documents with no associated sales order can detect which of the following non-asset cash misappropriation schemes?

False shipments.

Purchasing and receiving schemes.

Unconcealed inventory larceny.

Asset requisition schemes.
2.5 points
Question 32

Which of the following is not a method used to conceal false shipments of inventory?

Creating false sales orders.

Placing a false outstanding check on the bank reconciliation.


Writing off the inventory as scrap.

Physical padding (such as adding empty boxes to the inventory and counting them as full).
2.5 points
Question 33

From the article Control of Cash ter Thievery which of the following is not a red flag for a cash register disbursement scheme?

Low inventory shrinkage.

Altered cash register tapes.

Multiple refunds just under the review limit.

Increased refund transactions by the same employee.
2.5 points
Question 34

From the article So That's Why It's Called a Pyramid Scheme which of the following is false?

Assign experienced auditors for inventory observations.

Understand the relationship between the client and its principal suppliers.

It is more difficult to conspire with a family member than with an outsider.

Consider the increased risk with closely held businesses.
2.5 points
Question 35

From the article And Nothing But the Truth which of the following is true?

Most fraudulent disclosures involve purposeful omissions.

Management fraud is rarely detected through tips and complaints.

Material accounting changes need not be disclosed.

Management fraud for small amounts is not considered significant.
2.5 points
Question 36

From the article Ghost Goods: How to Spot Phantom Inventory to spot the possibility of phantom inventory, when analyzing a company's financial statements, the auditor should look for all of the following trends except:

Falling cost of sales as a percentage of sales.

Decreasing inventory turnover.

Cost of goods sold on the books agreeing to the tax return.

Inventory increasing faster than sales.
2.5 points
Question 37

From the article Let Them Know Someone's Watching which of the following is true?

From the boardroom to the mailroom all fraudsters think alike.

The auditor should not inquire as to the existence of fraud within the organization.

The auditor should never conduct a surprise audit.

Fraud prevention and deterrence are interchangeable terms.
2.5 points
Question 38

From the article To Catch a Liar which of the following is false?

There are no distinctions between interviewing and interrogating an employee while investigating a fraud.

Analyzing speech patterns and reading body language can help identify a liar.

Prepare the interview and be friendly.

Very few organizations are equipped to handle executive-level fraud.
2.5 points
Question 39

Non-Cash misappropriations of assets may be prevented or detected by:

Segregation of duties.


Matching invoices to receiving reports before payments are issued.

Matching packing slips to approved sales orders.

Matching every outgoing shipment to the sales order before the merchandise is shipped.

Examining significant increases in bad debt expense.

All of the above.
2.5 points
Question 40

Which of the following is false?

Weak internal controls breed fraud.

Red flags will always indicate fraud.

Fraud investigators and auditors should practice professional skepticism.

At first, the perpetrator will lie to you.

Regular, everyday people commit fraud.
2.5 points
Question 41

Anne deposits $2,000 that she had received as a gift into account with her husband. The account already had a balance of 4,000. If the spouses chose to withdraw $2,000 from the account, under the marital-property-out-first method how will this amount be identified in terms of separate property vs. transmuted property.

The entire 2,000 will have been deemed to have been withdrawn from the joint account.

The entire $2,000 will be deemed to have been withdrawn from Anne's separate property as the last in - first out.

$1,000 will be deemed to have been withdrawn from the joint account and $1,000 will be deemed to have been withdrawn from Anne's separate property.

$1,000 will be deemed to have been withdrawn from the joint account and $1,000 will be deemed to have been withdrawn from Anne's separate property.
2.5 points
Question 42

Which of the following is false?

The major weakness in a cash larceny scheme is the resulting imbalance in the organization's accounting records.

Because in skimming nothing is recorded, it is difficult to detect.

Accounts receivable skimming may be concealed by recording a fraudulent credit memo.

Skimming may be concealed by recording a fraudulent credit memo.

Most shell company schemes involve the purchase of goods rather than services.