Question

QUESTION 13

Expensing an on item only on the tax return that should be capitalized for tax purposes and for financial statements (such as the purchase of equipment which should be depreciated over its useful life and not expensed) will decrease net income.

True

False

QUESTION 14

You shouldn't report revenue if the shipment was sent to a seller's agent or to an installer as opposed to the ultimate purchaser as the delivery of product has not yet occurred.

True

False

QUESTION 15

Fraudulent financial statements can be used to sell stock or bonds to investors or to obtain loans and other forms of credit and to show financial results that improve management compensation and bonuses.

True

False

QUESTION 16

Intentional omission of disclosures or presentation of inadequate disclosures regarding accounting principles and related financial amounts is a type of financial statement fraud.

True

False

QUESTION 18

A company has a signed contract for a credit sale of product to a customer but has not specified a price to be charged. The product has been delivered and therefore the company book the revenue.

True

False

QUESTION 19

Channel stuffing should be looked at with a very skeptical eye by auditors because the buyer does not take delivery.

True

False

50. Match the fraudulent financial statement action with the harm it does.

_____ Lots of financial statement fraud covered in the news. Public has great concerns over the financial data that it consumes.

_____ Corporation and auditors are being brought to court as a result of class action suits brought by small and large investors who have been misled.

D.

Huge litigation cost and contingent liabilities.

E.

Erosion of public confidence and trust in the accounting profession.

Answer 1

13. yes the statement is true. in capitalizing the amount enter as expense in installment in other case os expense all the amount enter as expense in one go. so in the first year when it is entered as expense the net income be less than capitalizing method.

14. true . revenue is recognised when revenue is earned and measurable. revenue is earned when goods / risk and reward has been delivered. in this case goods are still with seller agent i.e still under the sellers risk

15. true . with fraudlant fst you can show more revenue, profit generation etc which can use for selling stocks , taking debt etc

16. true . fraudlant statement or missrepresentation is include under fraud. misrepresentation include omission or presentation of inadequate accounting principles.