Question 1

An employee who pockets cash received from a customer without recording the transaction is an example of a(n):

Accepted Answer

This scenario describes a cash register scheme, where the employee manipulates the cash register to steal funds by not recording the transaction. A disbursement scheme involves fraudulent payments to fake vendors or employees, an expense scheme involves submitting false expense reports, and check tampering involves altering or forging checks.

Question 2

The primary form of fraud committed against an organization is usually done by:

Accepted Answer

Research shows that the most common form of fraud committed against an organization is by its own employees. This can include embezzlement, falsifying financial records, and theft of company assets. While fraud by management or boards of directors can and does occur, it is less common than employee fraud. Stockholders are not typically involved in committing fraud against the organization.

Question 3

If an employee overbills a company for travel,this would be considered a(n):

Accepted Answer

Overbilling for travel expenses would fall under an expense scheme, as the employee is manipulating the amount of expenses being claimed for reimbursement. Disbursement schemes involve creating fake vendors or invoices, check tampering schemes involve altering or forging checks, and cash register schemes involve stealing cash through manipulating cash registers.

Question 4

In order to overstate earnings,a company can:

Accepted Answer

Overstating receivables increases assets and potentially revenue (if linked to revenue recognition), while understating payables decreases expenses (since expenses are not recognized as they should be), both of which can lead to an overstatement of earnings.

Question 5

An overstatement of earnings can inflate a company's stock price and may also be used to:

Accepted Answer

Overstating earnings may lead to the perception of a profitable company, resulting in larger bonuses for upper management at year-end, even if the earnings are not sustainable in the long run.

Question 6

________ embezzlement is a form of fraud committed against an organization.

Accepted Answer

Employee embezzlement refers to the act of stealing funds or assets from an organization by an employee. This can include theft of cash, checks, or other valuable assets. Management, board of directors, and stockholders may also be involved in embezzlement, but it is more commonly associated with employees.

Question 7

Granting customers a lower sales price for something that benefits you in return would be an example of a:

Accepted Answer

Granting customers a lower sales price in exchange for something that benefits you is a bribe or kickback, which is a form of corruption or unethical behavior. A disbursement scheme involves making fraudulent payments or reimbursements, a cash register scheme involves stealing cash from a register, and check tampering involves altering checks for personal gain.

Question 8

The chance to commit a fraud,conceal it,and avoid punishment is an example of:

Accepted Answer

Perceived opportunity refers to the belief that the fraud can be committed and concealed without being caught. This is often a key factor that can lead someone to commit fraud. Realization, rationalization, and perceived pressure are also commonly cited factors in fraud, but they do not directly relate to the ability to commit and conceal the fraud.

Question 9

Overbilling the company for parking fees or cab fare would be examples of:

Accepted Answer

Overbilling for parking fees or cab fare would fall under expense schemes, which involve falsely inflating the legitimate cost of business expenses for personal gain. Disbursement schemes involve the fraudulent creation of payments, cash register schemes involve the theft of sales revenues, and check tampering schemes involve fraudulent alterations or creation of checks.

Question 10

Recording assets that the company does NOT possess is an example of:

Accepted Answer

Recording assets that the company does not possess is a form of management fraud, as it involves intentionally misleading stakeholders about the company's financial position.

Question 11

Establishing fake companies,then having the company pay for goods or services that will never be delivered,and then intercepting and cashing the checks would be an example of a(n):

Accepted Answer

This scenario describes employee embezzlement, where an employee creates fake companies to fraudulently receive payments for undelivered goods or services, intercepting and cashing the checks for personal gain.

Question 12

If an employee receives a check from a customer,endorses it and then cashes it,this would be
Considered a(n):

Accepted Answer

This is a check tampering scheme, as the employee is altering the check by endorsing it and cashing it for their own benefit.

Question 13

Receiving favors from a supplier by turning a blind eye to the delivery of inferior goods is a form of:

Accepted Answer

Receiving favors from a supplier in exchange for overlooking the delivery of inferior goods is a form of bribery. Cash register scheme is a type of asset misappropriation, fraudulent financial reporting involves deliberately misrepresenting financial information, and management fraud involves the manipulation of financial statements to deceive stakeholders.

Question 14

Cash register schemes are a form of:

Accepted Answer

Cash register schemes are a type of employee embezzlement where the employee pockets cash after a transaction is made, rather than recording it in the system.

Question 15

By definition,an employee who tricks a company into giving up cash for an invalid reason has engaged in a(n):

Accepted Answer

An employee who tricks a company into giving up cash for an invalid reason is engaging in a disbursement scheme. This involves manipulating the company's disbursement processes, such as billing, payroll, or expense reimbursements, to fraudulently extract money.

Question 16

An employee may embezzle by taking bribes or kickbacks from:

Accepted Answer

An employee may embezzle by taking bribes or kickbacks from both suppliers and customers.

Question 17

Receiving something from a supplier in exchange for authorizing payments for goods not delivered to the employer would be an example of a:

Accepted Answer

This scenario describes a bribe or kickback scheme, where the employee receives something (a bribe or kickback) from the supplier in exchange for authorizing payments for goods that were never delivered to the employer. This is a form of corruption and a violation of the employee's fiduciary duty to act in the best interests of their employer. A cash receipts scheme involves stealing or misappropriating cash that has been received by the employer, a cash register scheme involves manipulating the cash register to steal cash, and check tampering involves altering or forging checks to divert funds.

Question 18

If an employee gives a false refund and pockets the cash,this would be considered a(n):

Accepted Answer

A cash register scheme involves manipulating or stealing cash at the point of sale, such as through false refunds or voids. In this scenario, the employee is giving a false refund and pocketing the cash, which would fall under the category of a cash register scheme.

Question 19

Which of the following is NOT part of the Fraud Triangle?

Accepted Answer

Realization is not part of the Fraud Triangle. The three components of the Fraud Triangle are perceived opportunity, perceived pressure, and rationalization.

Question 20

Embezzlement usually involves the misappropriation of business:

Accepted Answer

Embezzlement typically involves an employee misappropriating company assets, such as stealing money or property. Embezzlement of equity or liabilities is less common, and embezzlement of information is usually considered a breach of confidentiality or intellectual property theft rather than embezzlement.

Quiz 6: The Challenges of Accounting: Standards, internal Control, audits, fraud, and Ethics

An employee who pockets cash received from a customer without recording the transaction is an example of a(n) :