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Forensic Accounting

Business

Quiz 7 :

Conducting a Fraud Investigation

Quiz 7 :

Conducting a Fraud Investigation

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The rate prescribed by the applicable state (or federal) statute to be applied to a determined amount of economic loss is called a penal interest.
Free
True False
Answer:

Answer:

False

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An arbitration panel should include at least three lawyers.
Free
True False
Answer:

Answer:

False

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Financial statements analysis may reveal unexpected relationships or the absence of expected relationships.
Free
True False
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Answer:

True

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Stealing cash revenue after it has been recorded in the accounting system is called cash larceny.
True False
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The internal auditor of Trinity, Inc. suspected that the books of accounts did not show a true and fair value of the business. On his advice, the management of the company appointed Ravenwood to investigate into the matter. Ravenwood found that the suspicions of the internal auditor were reasonable. He created a fraud hypothesis and tested and refined the hypothesis via financial statement analysis and journal entry analysis. Which of the following should be Ravenwood's immediate next step?
Multiple Choice
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A hypothesis is simply a statement of fact.
True False
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Which of the following is a characteristic of fraudulent journal entries?
Multiple Choice
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Red Ram, Corp. suspected that the revenues of the company are being overstated. Which of the following conditions can confirm the reasonableness of this suspicion?
Multiple Choice
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The interview sequence should always start with possible co-conspirators.
True False
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Dylan, the accountant of Skylar Constructions, is being suspected for altering entries in the books of accounts and transferring the difference to a separate account. Dylan has recently bought a luxury car. You are appointed to investigate the fraud. Which of the following is a good preliminary hypothesis for the case?
Multiple Choice
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Journal entries can potentially undermine the validity of financial statements and the financial reporting process.
True False
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John Ambre has just accepted a forensic investigative engagement. Which of the following should be the first step to be taken by John?
Multiple Choice
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Which of the following enhances client understanding and acceptance through interim (phase) reporting?
Multiple Choice
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Diverting proceeds of business loans for personal use is known as unauthorized disbursements.
True False
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Which of the following journal entries is most likely a fraudulent journal entry?
Multiple Choice
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Mediation is less expensive than arbitration.
True False
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Which of the following is the objective of journal entry testing in a forensic accounting engagement?
Multiple Choice
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Ariel, the CFO of Zaria, Corp., suspects that the profits of the company are being overstated. Ariel suspects that someone from the mid-level management is behind this. The bonus of the mid-level managers is directly linked to the growth of net profit. The mid-level managers have received no bonus since three years as the reported profit of Zaria has been declining. The books of accounts are only accessible to Ariel. Which of the following elements of the fraud triangle is missing in this case?
Multiple Choice
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Under the accrual method of accounting, income is accounted for (recognized) when earned.
True False
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Under the periodic inventory method
Multiple Choice
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