(Multiple choice)
1. When vertical analysis is performed:
a. Ratios are used to detect fraud.
b. Changes in significant balance totals are examined.
c. Financial statement balances are converted to percentages.
d. Total revenues are compared to total expenses.

2. Horizontal analysis is different from vertical analysis in that:
a. There is no difference between horizontal and vertical analysis.
b. Horizontal analysis calculates the percentage change in balance sheet and income statement numbers from one period to the next, while vertical analysis converts balances in a single period to percentages.
c. Horizontal analysis converts balances in a single period to percentages, while vertical analysis calculates the percentage change in balance sheet and income statement numbers from one period to the next.
d. Key ratios are compared from one period to the next.

3. Which of the following is an advantage of using data analysis software to detect fraud?
a. It is a static approach, and results cannot be recombined in different ways.
b. Data analysis software can only be used to analyze small data sets.
c. Data analysis software can analyze entire populations rather than just samples.
d. Significant numbers of hits can occur, requiring iterative refinement of analyses.

4. Benford’s Law is:
a. The most expensive of all the digital analysis methods to implement and use.
b. The most effective way to identify actual frauds.
c. A method that uses vertical financial statement analysis.
d. An effective way to identify anomalies in data sets.

5. If a search reveals that an employee and a vendor have the same telephone number, this result may indicate that:
a. Vendors are overcharging for goods purchased.
b. Employees may be establishing dummy vendors.
c. Contractors are billing at the wrong rates.
d. A vendor is receiving kickbacks or other favors.

6. When conducting financial statement analysis, which ratio will be the most useful in determining whether a company has erroneously inflated accounts receivable?
a. Current ratio.
b. Profit margin.
c. Accounts receivable turnover.
d. Debt percentage.

7. When trying to identify outliers, what is one of the best statistical approaches?
a. A pie graph indicating the relative amounts.
b. Stratification of cases by value.
c. Time trending using the high-low slope method.
d. The z-score calculation.

8. An advantage of using ODBC to import data into a data warehouse is that:
a. ODBC doesn’t require the use of corporate database servers.
b. ODBC compresses data when stored on a CD or DVD.
c. ODBC automatically retrieves column names and types from the database.
d. ODBC keeps the investigator from dealing with the difficult SQL language.

9. The Soundex algorithm:
a. Uses consonants but ignores vowels.
b. Creates a numerical score representing how a word sounds.
c. Is useful when fuzzy matching values.
d. All of the above.