WGU C254 EXAM FRAUD AND FORENSIC ACCOUNTING

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WGU C254 EXAM FRAUD AND FORENSIC ACCOUNTING

EXAM COMPLETE 400 QUESTIONS AND CORRECT

DETAILED ANSWERS LATEST UPDATE THIS YEAR - JUST

RELEASED

WGU C254 EXAM: FRAUD AND FORENSIC ACCOUNTING 1

QUESTION: What is the most common method used to commit financial statement fraud, according to the COSO study?

• capitalizing expenses
• overstating existing assets
• improperly recognizing revenue
• failing to give complete disclosure - ANSWER-C

QUESTION: What was the auditor's responsibility to detect fraud under SAP 30?

• to thoroughly interview key employees
• to conduct statistical regression models
• to be aware of the possibility that irregularities may exist
• to determine if management was giving false statements - ANSWER-C
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QUESTION: What were auditors required to do under SAP 30?

• test for fraud until it is found
• design tests to detect fraud
• maintain a high level of mistrust in management
• assume increased responsibility to detect fraud - ANSWER-B

QUESTION: Prior to the Sarbanes-Oxley regulations and according to SAS 16, under what circumstances can auditors rely upon the truthfulness of records obtained from the client?

• until there is evidence to suggest otherwise
• after a thorough internal control investigation
• after management has taken polygraph examinations
• once substantial testing on the reliability of records has been conducted - ANSWER-A

Which action is potentially unethical because it understates COGS?

• Understating purchases
• Understating purchase returns
• Understating ending inventory
• Understating purchase discounts - ANSWER-A
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3 QUESTION: 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 - ANSWER-A

QUESTION: How can financial statement fraud impact stakeholders?

• investors may experience lower interest rates
• fraud can be an embarrassment to the audit profession
• investors may be more willing to purchase new stock issues
• fraud can lead to stock options decreasingly being used for executive compensation -

ANSWER-B

QUESTION: 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 3 / 4

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• CEOs acquire additional company stock following financial statement fraud - ANSWER-C

QUESTION: 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 - ANSWER-D

QUESTION: 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
• 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 - ANSWER-A and C

QUESTION: What is motivation behind committing fraud through backdating of stock options?

• giving bonuses to employees
• increasing executive compensation
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