Question

wonderful dinner. How can ISO proper disse REVIEW QUESTIONS 1. Why might senior manament owerstate or understate performance? 2. What are some of the ways in which financial statement committed? What is the conceptual framework for financial reporting? 4. What are the five classifications of financial statement fraud? 5. How are fictitious revenue schemes committed? What are the four chilera necessary for a sale How can understating liabilities and expenses more profitable? What issues are generally involved in improper How may improper asset valuation inflate the 10. How can financial statement fraud be deterred five major die MULTIPLE CHOICE QUESTIONS 1. Which of the following is a common reson why senior manageme might overstate or understate business performance? A. Pressures to boost revenues or expenses R. Improperly designed incentive (eg., bonus) packages C. High levels of personal det leading to a need for the executive to generate cash D. Desire to manage carnings until conditions improve Which of the following is nor one of the five mai financial statement fraud? A. Fictitious revenues B. Improper disclosures C. Concealed liabilities D. Channel stuffing 2. Which of the following is not a methodology by which financial statement fraud is committed? A. Manipulation of revenue B. Manipulation of asset valuations C. Manipulation of disclosures D. Manipulation of accounting regulations Which of the following is not a fictitious revenue sch A. Matching expenses to revenues B. Premature revenue recognition C. Conditional sales D. Channel stuffing 3. From the conceptual framework for financial reporting, which concept permits management to account for transactions in any manner they please? A. Materiality B. Consistency C. Historical cost D. None of the above 6. Given the four criteria necessary for a sale to become complete, whic following is not one of those conditions? A. Delivery has occurred or services rendered B. Cash has been collected. C. The sales price is fixed or determinable D. Documentation exists that can serve as evidence of 7. Or the following, choose the one that depicts a situation where and expenses are manipulated to make a company appear more A. Liabilities are capitalized to increase revenues B. Adelphia Communications fraud Ροαζε

Answer 1

1. Overstating or understating business performance will not help to repay personal debt as the personal loan of the manager is not sanctioned on the guarantee of the business performance. These are not directly related thus there will be not benefit associated.

Answer: C

2. When there is a manipulation of revenue, asset revaluation and accounting regulation, there is a fact of creating material misstatement in the books of accounts. But misstatement in disclosure might happen due to omission or may be unintentional as there is not illegal alteration in the books. It is a case of not disclosing all the relevant facts and figures as per the accounting standards. This is wrong practice but not a fraud as we have not presented any forge or false data.

Answer: C

3. The materiality concept permits to ignore the accounting standards if the impact of doing such is very small or immaterial. This mean the manner can be different but the end result should be the same.

Answer: A

4. Channel stuffing is a technique to increase the sales figure of the business. In this method, the business supplies excessive goods to the market than demanded. This means there is no high demand but still the supply is high to show that the sales are goods. Supplying excessive goods in the market in the legal way is not a fraud as high supply will only reduce the price of the product in the market.

Answer: D

As mentioned in the question, I have only solved the MCQs.

As per policy, I can solve first four questions.

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