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.