| Question 1. | Question : | (TCO 5) The two most common types of fraud impacting financial statements are |
| | Student Answer: | | fraudulent financial reporting and e-commerce fraud. | | | | misappropriation of assets and embezzlement. | | | | fraudulent financial reporting and misappropriation of assets. | | | | cooking the books and fraudulent financial reporting. | | | |
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| Question 2. | Question : | (TCO 5) Fraud is the ultimate unethical act in business because |
| | Student Answer: | | the perpetrators usually do so for their own short-term economic gain at the expense of others. | | | | fraud is illegal. | | | | fraud violates the rights of many for the temporary betterment of a few. | | | | All of the above | | | |
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| Question 3. | Question : | (TCO 5) Internal controls are designed to accomplish five objectives: comply with legal requirements, promote operational efficiency, safeguard assets, encourage employees to follow company policy, and |
| | Student Answer: | | prevent embezzlement. | | | | prevent collusion. | | | | ensure accurate, reliable external audits. | | | | ensure accurate, reliable accounting records. | | | |
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| Question 4. | Question : | (TCO 5) A fidelity bond is a(n) |
| | Student Answer: | | employment contract for a specified period of time. | | | | insurance policy that reimburses a company for employee theft. | | | | contract prohibiting former employees from working for a competitor. | | | | promise by a company to safeguard customers’ personal information. | | | |
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| Question 5. | Question : | (TCO 5) Hints of where fraud, mistakes, or financial harm can occur in a company is called |
| | Student Answer: | | the control environment. | | | | risk assessment. | | | | control procedures. | | | | the tone at the top. | | | |
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| Question 6. | Question : | (TCO 5) Creating bogus websites for the purpose of stealing unauthorized data is a(n) |
| | Student Answer: | | encryption device. | | | | phishing expedition. | | | | computer virus. | | | | Trojan horse. | | | |
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| Question 7. | Question : | (TCO 5) Deposits that have been recorded on the book, but have not yet been recorded by the bank are |
| | Student Answer: | | nonsufficient funds deposits. | | | | outstanding deposits. | | | | deposits in transit. | | | | electronic funds deposits. | | | |
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| Question 8. | Question : | (TCO 5) Cash requires specific internal controls because |
| | Student Answer: | | cash is one of the most difficult assets to steal. | | | | cash is difficult to convert to other forms of wealth. | | | | all transactions ultimately affect cash. | | | | cash is difficult to conceal. | | | |
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| Question 9. | Question : | (TCO 5) Another name for short-term investments is |
| | Student Answer: | | equity investments. | | | | marketable securities. | | | | market investments. | | | | available-for-sale securities. | | | |
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| Question 10. | Question : | (TCO 5) A business offers credit terms of 1/15, n/30. These terms indicate that |
| | Student Answer: | | the total amount of the invoice must be paid within 15 days. | | | | a discount of 1% can be taken if the invoice is paid within 15 days. | | | | the buyer can take a 1% discount if the bill is paid within 15 or 30 days. | | | | no discount is offered for early payment. | | | |
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