(True and False)
1. Understated revenues and understated net income are among the most common types of financial statement fraud.

2. Two reasons revenue-related financial statement fraud is so prevalent are because revenue recognition can be highly subjective and because revenue is so easily manipulated.

3. Performing a horizontal analysis of the statement of cash flows is an excellent way to proactively search for revenue-related financial statement fraud.

4. The most common accounts manipulated when perpetrating financial statement fraud are revenues and accounts receivable.

5. An increase in gross margin and an increase in number of days’ sales in inventory could be an indication of inflated inventory fraud.

6. A “sales discounts” amount that appears too low could be a fraud symptom.

7. Comparing financial results and trends of a company with those of similar firms is an ineffective way to look for fraud symptoms.