ACCT 574/ ACC574 Week 4 Midterm (HIGHLIGHTED CORRECT ANSWERS)

ACCT 574 Week 4 Midterm Exam Page: 1 2 1. Question : (TCO A) Which statement is false? Student Answer: The Public Oversight Board suggested an attitudinal shift in an auditor's degree of skepticism. If a forensic a ...

ACCT 574 Week 4 Midterm Exam Page: 1 2 1. Question : (TCO A) Which statement is false? Student Answer: The Public Oversight Board suggested an attitudinal shift in an auditor's degree of skepticism. If a forensic accountant conducts a separate fraud investigation, he or she must follow consulting standards. In the early 1980s, changed auditing standards resulted in less reliance on internal controls. The Public Oversight Board's report occurred before the SarbanesOxley Act. All of the above are true ( ) Instructor Explanation:Chapter 1, page 1-13 Points Received: Comments: 0 of 4 2. Question : (TCO A) What would be a task of a litigation services practitioner? Student Answer: Issue identifications Expert testimony Mediation Arbitration All of the above ( ) Instructor Explanation:Chapter 2, page 2-13 Points Received: Comments: 4 of 4 3. Question : (TCO A) Which is not a forensic-type certificate? Student Answer: FASNA CFE Cr.FA CFFA Instructor Explanation: Page 4-7 Points Received: 4 of 4 Comments: 11. Question : (TCO A) Horizontal analysis typically involves what? Student Answer: A) Comparison of companies by market share in the industry B) Comparison of cash value at a predictable moment in liquidity C) Comparison of year-to-year changes in financial statements D) 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 Comments: 12. Question : (TCO A) Given these facts, calculate return on equity: Sales $8,200,000 Net Income 2,050,000 Average Total Assets 7,100,000 Average Total Liabilities 3,500,000 Student Answer: .29 .57 2.28 .71 Not enough information is given. ( ) Instructor Explanation: Chapter 4, page 4-43 ROE = Net Income/Average Common Equity, and Average Common Equity = 3.6 mil (7.1 mil ­ 3.5 mil); 2.05 mil/3.6 mil = .5694 Points Received: 4 of 4 Comments: 13. Question : (TCO B) What is a red flag of kiting? Student Answer: A) Frequent deposits and checks in the same amount B) Large deposits on Fridays C) Short time lag between deposits and withdrawals Only A and C Items A, B, and C ( ) Instructor Explanation:Chapter 5, page 5-12 Points Received: 4 of 4 Comments: 18. Question : (TCO B) Which would be a red flag of phantom vendors? Student Answer: Unfamiliar vendor Vendor's name consists of initials Vendor has post office box address Rapidly increasing purchases from one vendor All of the above ( ) Instructor Explanation:Chapter 6, page 6-27. Points Received: 4 of 4 Comments: 19. Question : (TCO B) Based upon the following facts, determine a person's preliminary understatement of income: Schedule C receipts $100,000 Schedule C expenses 85,000 Personal living expenses 95,000 Student Answer: An overstatement $80,000. $15,000. $90,000. None of the above Instructor Explanation: Chapter 6, page 6-8 thru 6-10 (cash T ). $100,000 - $85,000 $95,000 = $80,000 understatement Points Received: Comments: 4 of 4 20. Question : (TCO B) A first step in a money laundering operation is to: Student Answer: Obtain legal money. Deposit illegal money into the banking system. Open a correspondent account. Send a money wire transfer to another country. None of the above. ( ) Instructor Explanation:Chapter 7, page 7-3 Points Received: Comments: 4 of 4 21. Question : (TCO B) Banks must file which of the following forms when they become aware of suspicious customer activity related to possible money laundering? Student Answer: Currency Transaction Report Over-Currency Report International Transportation of Currency and Money Report None of the above Instructor Instructor Explanation:Chapter 9, page 9-3 Points Received: 4 of 4 Comments: 30. Question : (TCO C) The fifth major phase of litigation is which of the following? Student Answer: Trial Pleadings Discovery Outcome Possible appeal ( ) Instructor Explanation:Chapter 8, page 8-4 Points Received: 4 of 4 Comments: Page: 1 2