Topic 2 MCQ Fraud examination MCQ tests

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Identify the two basic bribery schemes. Selected Answer:

Kickbacks and bid-rigging Theft and skimming

Answers:

Kickbacks and bid-rigging Economic extortion and illegal gratuity Lapping and extortion 

Question 2 1 out of 1 points

A fraud perpetrator uses the float time between banks to give the impression that he had money in his accounts. Which crime is he committing? Selected Answer:

Kiting Floating

Answers:

Strip Spinning Kiting 

Question 3 0 out of 1 points

Which department or group accounted for the maximum percentage of fraud incidents according to the study conducted by ACFE in 2010? Selected Answer: Answers:

sales accounting human resources top management

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Question 4 1 out of 1 points

Which of the following is NOT a primary control procedure to minimize the occurrence of fraud?

Selected Answer:

Internal audit department Dual custody

Answers:

Systems of authorization Internal audit department Documents and records 

Question 5 1 out of 1 points

What is the strongest factor in deterring future fraud activity? Selected Answer:

Legal prosecution. Answers:

Legal prosecution. Sanctions. Termination. Counseling. 

Question 6 1 out of 1 points

Theft is easier to detect than skimming because: Selected Answer:

theft involves stealing cash after it has already been recorded in the company's accounting system.

Answers:

theft involves stealing cash after it has already been recorded in the company's accounting system. theft involves fraudulent disbursements of cash, while skimming involves fraudulent receipts of cash. theft involves stealing cash before it has been recorded in the company's accounting system. theft can take place in any circumstance in which an employee has access to cash. Answer Feedback:

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Correct

Question 7 1 out of 1 points

Which of the following is the best example of theft of cash through skimming?

Selected Answer:

Answers:

Understating sales by recording larger-than reality sales discounts. Preparing fraudulent checks. Understating sales by recording larger-than reality sales discounts. Setting up dummy companies. Stealing cash after it has already been recorded.

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Question 8 0 out of 1 points

All of the following are possible ways to commit fraud by using a payroll scheme EXCEPT: Selected Answer: Answers:

overstating expenses. falsifying hours worked. creating ghost employees. producing false worker compensation claim. 

Question 9 1 out of 1 points

An employee who has the responsibilities of both writing cheques and making bank deposits would have ____. Selected Answer:

Perceived opportunity Answers:

Financial pressure Perceived opportunity Rationalization Very sore hands

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Question 10 1 out of 1 points

According to the ACFE study described in the text, which fraudulent disbursement scheme occurs most frequently? Selected Answer:

Billing scheme Answers:

Billing scheme Wire transfers Payroll scheme Register disbursements 

Question 11 1 out of 1 points

Orders placed for buying shares of a mutual fund any time up to 4:00 p.m. are priced at that day's NAV, and orders placed after 4:01 p.m. are priced at the next day's NAV. What is this practice known as? Selected Answer:

Forward pricing Answers:

Forward pricing Late trading Price arbitrage Price dealing 

Question 12 1 out of 1 points

Claiming personal travel as a business expense, a personal lunch as a business lunch, altering a receipt to reflect a higher amount than was actually paid, or submitting fictitious receipt is an example of ________. Selected Answer:

an expense reimbursement scheme Answers:

a billing scheme a payroll disbursement scheme a register disbursement scheme an expense reimbursement scheme

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Question 13 1 out of 1 points

Modeling and labeling are sub-components of which control structure component? Selected Answer:

Control environment Answers:

Control environment Accounting system Control procedure Review 

Question 14 1 out of 1 points

Of all payroll fraud schemes, ______ schemes tend to generate the largest losses. Selected Answer:

ghost employee commission

Answers:

falsified hours and salary ghost employee false worker compensation 

Question 15 1 out of 1 points

The fraud triangle includes all of the following EXCEPT: Selected Answer:

Validation Answers:

Validation Perceived opportunity Rationalization Perceived pressure 

Question 16 1 out of 1 points

Identify the statement that does NOT represent one of the four types of corruption. Selected Answer:

Answers:

Overbilling the company for travel and other related business expenses, such as business lunches, hotel bills, and air travel. Offering, giving, receiving, or soliciting anything of value in order to influence an official act. Overbilling the company for travel and other related

business expenses, such as business lunches, hotel bills, and air travel. The employee demands a payment from a vendor in order to make a decision in that vendor's favor. The exertion of an employee's influence to the detriment of his or her company. 

Question 17 1 out of 1 points

According to the ACFE study, ________ comprises by far the highest percentage of asset misappropriation. Selected Answer:

fraudulent disbursement theft

Answers:

skimming delayed payment recognition fraudulent disbursement 

Question 18 1 out of 1 points

Which of the following examples is NOT a billing scheme? Selected Answer:

Answers:

Mark submits a receipt of his cab fare for reimbursement, which includes an extra $10. Mary purchases a new laptop for her brother-in-law with company's funds. Mark submits a receipt of his cab fare for reimbursement, which includes an extra $10. Joven double pays a vendor for the purchase of inventory and then pockets the second payment when it is returned. Harry submits invoices in the name of the dummy company and collects the amount.

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Question 19 1 out of 1 points

An ice cream store cashier sells two-scoop ice cream cones to customers and enters the sales as single-scoop sales, while keeping the difference for himself. Which fraud is being committed here?

Selected Answer:

Skimming Answers:

Theft Disbursement Skimming Illegal gratuities

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Question 20 1 out of 1 points

When management fraud occurs, companies usually: Selected Answer:

overstate assets and net income. Answers:

overstate assets and net income. understate assets and net income. overstate assets and understate net income. understate assets and overstate net income. 

Question 21 0 out of 1 points

Thefts of inventory are divided into two groups. Identify them. Selected Answer: Answers:

Corruption and bribery Expense scheme and skimming Economic extortion and illegal gratuities Larceny and misuse 

Question 22 1 out of 1 points

Many individuals, when persuaded by a trusted friend to participate in fraud, will rationalize the actions as being justifiable. Which type of power is being employed in such situations? Selected Answer:

Referent power Answers:

Referent power Legitimate power

Coercive power Reward power Horse power

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Question 23 1 out of 1 points

Most fraud perpetrators have profiles that look like: Selected Answer:

Those of other honest people Answers:

Those of other honest people Those with criminal records Those who are uneducated Those who use alcohol and drugs 

Question 24 1 out of 1 points

What is the most important element in a control environment? Selected Answer:

Management's role and example Answers:

Management's communication Management's role and example The hiring process The internal audit department

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Question 25 1 out of 1 points

Financial statement fraud is typically committed by: Selected Answer:

Top management Answers:

Employees with access to company assets Top management Customers Vendors

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Question 26 1 out of 1 points

Which of the following is NOT one of the key elements common to all frauds? Selected Answer:

Perceived inequality Answers:

Perceived pressure Perceived inequality Perceived opportunity Rationalization

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Question 27 0 out of 1 points

_____ is the ability of the perpetrator to relate to the potential coconspirator. Answers:

Expert power Legitimate power Referent power Reward power