Question

In: Accounting

28. Which of the following statements is true? MULTIPLE CHOICE a. Studies show that frauds perpetrated...

28. Which of the following statements is true?

MULTIPLE CHOICE

a. Studies show that frauds perpetrated by males average a larger dollar amount than those perpetrated by females.

b. Studies show that frauds perpetrated by females average a larger dollar amount than those perpetrated by males.

c. Studies show that frauds perpetrated by males and females average basically the same dollar amount.  

29. Which of the following statements is true?

MULTIPLE CHOICE

a. The average amount for a fraud in a large business is more than the average amount in a small business.

b. The average amount for a fraud in a small business is more than the average amount in a large business.

c. The average amount for a fraud in a small business and a large business is basically the same.

30. Most frauds utilizing lapping of accounts receivable occur because:

MULTIPLE CHOICE

a. The same person collects the cash and reconciles the bank account.

b. The same person collects the cash and records the accounts receivable.

c. The same person collects the cash and controls the inventory.

d. The same person collects the cash and records entries in the general ledger.

31. Which of the following is not part of the COSO definition of internal control?

MULTIPLE CHOICE

a. Reliability of financial reporting.

b. Effectiveness and efficiency of operations.

c. Ability to make a profit.

d. Compliance with applicable laws and regulations.

32. Increasing the perception of frauds being detected does not provide a significant deterrent to employee theft.

MULTIPLE CHOICE

True or false?

Solutions

Expert Solution

28. The true statement is point A i.e. Studies show that frauds perpetrated by males average a larger dollar amount than those perpetrated by females.

As per Association of Certified Fraud Examiners, fraud are significantly more likely to be perpetrated by men than women.

29. The true statement is point B i.e. The average amount for a fraud in a small business is more than the average amount in a large business.

The reason is that in big organisations, tthe Internal Controles will be there and monitored/reviewed frequently. But this thing will not be there in small organisations.

30. The true statement is point B i.e. The same person collects the cash and records the accounts receivable.

Lapping is a technique, where in the employee steals cash by diverting a payment from one customer, and then hides the theft by diverting cash from another customer to offset the receivable from the first customer and it continues.

31. Answer is C i.e. Ability to make a profit.

If we observe the definition of COSO, It explains that the internal control as “a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance of the achievement of objectives in the following categories:

  • Effectiveness and efficiency of operations
  • Reliability of financial reporting
  • Compliance with applicable laws and regulations”

32. Answer is True. This is based on the evaluation of fraud theory.


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