QUESTION:- ASSET EMBEZZLEMENT SERVES TO REDUCE THE VALUE OF THE LEFT SIDE OF THE ACCOUNTING EQUATION. TO CONCEAL THE EMBEZZLEMENT, HOW WOULD A FRAUD PERPETRATOR REDUCE THE RIGHT SIDE OF THE ACCOUNTING EQUATION? A. REDUCE ACCOUNTS PAYABLE. B. PAY DIVIDENDS. C. PAY ADDITIONAL EXPENSES. D. INCREASE REVENUE.

QUESTION:- ASSET EMBEZZLEMENT SERVES TO REDUCE THE VALUE OF THE LEFT SIDE OF THE ACCOUNTING EQUATION. TO CONCEAL THE EMBEZZLEMENT, HOW WOULD A FRAUD PERPETRATOR REDUCE THE RIGHT SIDE OF THE ACCOUNTING EQUATION? A. REDUCE ACCOUNTS PAYABLE. B. PAY DIVIDENDS. C. PAY ADDITIONAL EXPENSES. D. INCREASE REVENUE.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 9CYBK

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Give an example of an error or fraud that would misstate financial statements to affect the accounts as follows, taking each case independently. (Note: “Overstate” means the account has a higher value than would be appropriate under GAAP and “understate” means it has a lower value.)a. Overstate one asset; understate another asset.b. Overstate an asset; overstate stockholders’ equity.c. Overstate an asset; overstate revenue.d. Overstate an asset; understate an expense.e. Overstate a liability; overstate an expense.f. Understate an asset; overstate an expense.g. Understate a liability; understate an expense.
D1. You read that there is no generally accepted definition of ‘earnings management’. Using your accounting knowledge, your own research and textbook reading to define, describe, and analyze: When will earnings management be acceptable? When will earnings management become a fraud? Fraudulent earnings management is often identified by two adjectives. What are the two adjectives?
Define the following terms below: a. Financial crime b. Fraud triangle c. Money laundering d. Accounting Fraud e. Asset misappropriation f. Consumer fraud g. Data theft h. Tax fraud NB: Answer questions a-h
Fraudulent reporting by management could include a. Fictitious revenues from a fake customer. b. Improper asset valuation. c. Mismatching revenues and expenses. d. All of the above.
Identify one specific type of accounting fraud. What damage does the perpetration cause? What could be done to prevent it?
Briefly explain what is meant by the risk of ‘Fraud in Revenue Recognition’ Is there always a presumed risk of ‘Fraud in Revenue Recognition’? Explain your answer (c) Explain 4 Fraud Risk Factors that may heighten the risk of fraudulent financial reporting or misappropriation of assets. Answer in the table below: Risk Factor 1 2 3 4
Select the correct answer(s) for the following multiple-choice questions. Note that there may be more than one correct answer. Which of the following statements is (are) true? a. To prevent detection when an asset is stolen, the perpetrator must inflate liabilities or decrease assets. b. Committing a fraud almost always takes more effort and time than concealing it. c. Perpetrators can hide an asset theft by charging the stolen item to an expense account. d. A lapping scheme is used to commit fraud but not to conceal it. e. An individual can hide the theft of cash using a check-kiting scheme.
In a single-entry system, what financial aspect is challenging to detect due to its limited recording approach? A. Outstanding liabilities B. Fraud C. Revenue D. Gross profit
2. After completing a horizontal and vertical analysis of the Balance Sheet and Income Statement. Increases in cash do not match the companies net income. What type of documentation and information should the auditors request to further evaluate for potential fraud? What might explain this increase to cash in relation to Net Income?
The fraud triangle asserts that the following three factors must exist for a person to commit fraud.A. Opportunity B. Pressure C. RationalizationIdentify the fraud risk factor (A, B, or C) in each of the following situations. No one matches the cash in the register to receipts when shifts end.