Auditing: A Risk Based-Approach to Conducting a Quality Audit
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Chapter 2, Problem 17MCQ
To determine

Introduction:Fraudulent financial reporting is referred to as manipulating the financial statements to achieve certain objectives. Fraudulent financial reporting is conducted by higher level management and affects various stakeholders.

To identify:The option that represents the correct answer relating to the type of transactions that were used in WC Company fraud.

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If a company reported fi ctitious revenue, it could try to cover up its fraud by: A . decreasing assets.
Which one is not the fraudulent financial reporting? Select one: a. Cash shortage b. Lack of working capital c. Favourable industry economic condition d. Frequent changes of auditor
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.
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