Question 1. The two most common types of fraud impacting financial statements are
fraudulent financial reporting and e-commerce fraud.
misappropriation of assets and embezzlement.
fraudulent financial reporting and misappropriation of assets.
cooking the books and fraudulent financial reporting.

Question 2. Which of the following is a true statement regarding fraud?
Fraud is committed when an error is made.
Fraud does not occur in not-for-profit organizations.
The expansion of e-commerce has caused fraud to decrease.
Most businesses surveyed had experienced fraud.

Question 3. Internal control is a plan of organization and system of procedures implemented by company _____ and the _____ designed to accomplish five objectives.
internal auditors, employees
external auditors, management
management, board of directors
employees, board of directors

Question 4. A fidelity bond is a(n)
employment contract for a specified period of time.
insurance policy that reimburses a company for employee theft.
contract prohibiting former employees from working for a competitor.
promise by a company to safeguard customers' personal information.

Question 5. Proper separation of duties and physical safeguards to protect assets from theft are part of a company's
information system.
control procedures.
control monitoring.
personnel maintenance.

Question 6. E-commerce pitfalls include all of the following except
stolen credit card numbers.
phishing expedition.
encryption reporting.
Trojan horses.

Question 7. When preparing a bank reconciliation, which of the following items should be added to the book balance?
EFT receipts
Deposits in transit
Collection items
Both EFT receipts and collection items

Question 8. Which of the following is an accurate statement regarding cash receipts over the counter?
The point-of-sale terminal electronically transmits a record of the sale to the store's main computer.
Employees should take the deposit to the bank.
The cashier should reconcile the electronic record of the sales per the terminal to the record of cash received.
Point-of-sale terminals cannot assist in inventory control.

Question 9. Another name for short-term investments is
equity investments.
marketable securities.
market investments.
available-for-sale securities.

Question 10. A business offers credit terms of 1/15, n/30. These terms indicate that
the total amount of the invoice must be paid within 15 days.
a discount of 1% can be taken if the invoice is paid within 15 days.
the buyer can take a 1% discount if the bill is paid within 15 or 30 days.
no discount is offered for early payment.