(Multiple choice) 1. When looking for inventory fraud, an import

(Multiple choice)
1. When looking for inventory fraud, an important question to ask is:
a. What is the nature of inventory?
b. What is the age of inventory?
c. What is the salability of inventory?
d. All are important questions to ask.

2. Which of the following ratios would not generally be used to look for inventory- and cost of goods sold-related frauds?
a. Accounts payable turnover.
b. Gross profit margin.
c. Inventory turnover.
d. Number of days' sales in inventory.

3. In order to analyze financial statements for fraud, an auditor or fraud examiner should consider all of the following except:
a. The types of accounts that should be included in the financial statements.
The types of fraud to which the company is susceptible.
c. The nature of the company's business and industry.
d. The auditor should consider all of the above.

4. Last-minute revenue adjustments, unsupported balance sheet amounts, and improperly recorded revenues are examples of:
a. Analytical symptoms.
b. Documentary symptoms.
c. Control symptoms.
d. Perceptional symptoms.

5. Accounts that can be manipulated in revenue fraud include all of the following except:
a. Accounts Receivable.
b. Bad Debt Expense.
c. Inventory.
d. Sales Discounts.

6. Which financial ratio is not useful in detecting revenue-related fraud?
a. Gross profit margin ratio.
b. Account receivable turnover ratio.
c. Asset turnover ratio.
d. All of the above are useful revenue-related fraud detection ratios.

7. The asset turnover ratio measures:
a. The average time an asset is used by the company.
b. The average useful life of capital assets.
c. Sales that are generated with each dollar of the assets.
d. Assets that are purchased with each dollar of sales.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...


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