WGU C254 Fraud and Forensic Accounting Latest Update 100% Pass
Which action is potentially unethical because it understates COGS?
- Understating purchases
- Understating purchase returns
- Understating ending inventory
- Understating purchase discounts ✔✔A
Why is it unethical for a supervisor to ask an accountant to capitalize the marketing research program?
- this action overstates assets
- this action overstates expenses
- this action understates liabilities
- this action understates net income ✔✔A
How can financial statement fraud impact stakeholders?
- investors may experience lower interest rates
- fraud can be an embarrassment to the audit profession 1 / 3
- investors may be more willing to purchase new stock issues
- fraud can lead to stock options decreasingly being used for executive compensation ✔✔B
How do fraudulent financial statements impact stakeholders and the markets?
- financial statement fraud leads to embezzlement
- interest rates rise as a result of financial statement fraud
- financial statement fraud leads investors to lose confidence
- CEOs acquire additional company stock following financial statement fraud ✔✔C
What is a consequence of financial statement fraud?
- the organization shows losses due to embezzlement
- red flags prove that fraud occurred in the organization
- suppliers are able to take advantage of the organization
- the organization appears more profitable than it actually is ✔✔D
What are two potential consequences a company accused of financial statement fraud can face?
- the CEO might be indicted and convicted
- the SEC might relist and refinance the company 2 / 3
- company stock price might decline when news of fraud reaches the press
- the company may be required to issue new stock to provide needed funds ✔✔A and C
What is motivation behind committing fraud through backdating of stock options?
- giving bonuses to employees
- increasing executive compensation
- ensuring a successful stock issuance
- preventing a violation of debt covenants ✔✔B
What is a common motivator of financial statement fraud?
- greed
- intelligence
- health issues
- sense of entitlement ✔✔A
What is the most common method used to commit financial statement fraud, according to the COSO study?
- capitalizing expenses
- / 3