Midterm: Audit and Net Worth Essay

Submitted By blues4016
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Pages: 5

Spring 2014 Midterm
Forensic Accounting

1. Peremptory refers to: a. Be there first.
b. Not requiring any cause to be shown.
c. One who strives to be the best.
d. Take the place of.
e. None of the above.

2. What is not an indirect IRS audit technique?

a. Cash T.
b. Net worth method.
c. Finding an unreported real estate sale.
d. Bank deposit method.
e. None of the above.

3. Which would probably not be an added procedure in a forensic audit?

a. Extensive use of interviews.
b. Not accepting sampling as evidence.
c. Mending evidential matter standards with the rules of evidence.
d. Searching for legal evidence.
e. All would be used.

4. Which is not one of the six areas of litigation services that an AICPA committee suggested in 1986?

a. Valuation
b. Damages
c. Attestation
d. Analyses
e. Accounting

5. Things forensic are generally those things that relate to a _____________ forum or court.

6. Which would not be useful in searching for hidden assets?

a. Looking at lifestyles of major players.
b. Computing industry ratios.
c. Comparing cash flow with income.
d. Using the net worth method.
e. None of the above.

7. Fighting fraud is a _______________ and not a sprint.

8. The forensic certification of the AICPA is the:

b. Cr. FA
c. CFE
e. CFF

9. Fraud is much like an iceberg: many of the behavioral factors lurk on top of the water ready to sink a corporation.

a. True
b. False

10. The older fraud pyramid does not contain this factor:

a. Means.
b. Motive.
c. Rationalization.
d. Opportunity.
e. Both c and d.

11. COSA defines "internal controls" as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories except:

a. A reasonable degree of transparency.
b. Effectiveness and efficiency of operations.
c. Reliability of financial reporting.
d. Compliance with applicable laws and regulations.
e. All of the above.

12. Employee fraud can be discovered by considering:

a. Behavioral habits.
b. Employee stress factors.
c. Lifestyle of the employee.
d. Assets owned by the employee.
e. All of the above.

13. _____________________________ crime has been called a type of crime by the advantaged.

14. Under the __________________________ doctrine, the owners of a corporation are held responsible for corporate acts by piercing the corporate veil and disregarding the corporate entity.

15. Inventory, sales, and receivables should move in tandem.

a. True
b. False

16. Control risk is:

a. A risk that a material error in the balance or transaction class will not be prevented or detected.
b. The risk that an account or transactions contain material misstatements before the effects or the controls.
c. The measure of whether something is significant enough to change an investor's investment decision is a prime consideration in how the audit is conducted.
d. The risk that audit procedures will not turn up material error when it exists.
e. None of the above.

17. Which is not one of the factors in SAS No. 99's pyramid of fraud?

a. Incentives.
b. Pressures.
c. Opportunities.
d. Attitudes/rationalization.
e. All of the above are SAS No. 99 factors.

18. Which would not be considered an analytical procedure?

a. Comparison with other operating information.
b. Vertical analysis.
c. Variance analysis.
d. Ratio analysis.
e. All of above are analytical procedures.

19. Given these facts, compute inventory turnover:

Total assets
Cost of goods sold
Average inventory
Interest expense

a. .59.
b. 1.69.
c. 2.59.
d. 7.69.
e. Not enough information is given.

20. Which statement is probably false?

a. Expert witnessing articles began to appear in accounting literature in late 1800s.
b. The Journal of Accountancy first appeared in