答案和详解如下！
Part 1) Are Dyke’s and Spindrift’s statements about their suspicions that management is overreporting earnings correct with respect to:
| covenants? | fraud triangle? | A) | Correct | Incorrect | B) | Incorrect | Incorrect | C) | Correct | Correct | D) | Incorrect | Correct |
The correct answer was A) Correct Incorrect Spindrift is correct that trying to meet debt covenants is a common incentive for management to overreport earnings. Dykes is incorrect about the fraud triangle because the three components are incentive and/or pressure, opportunity, and attitudes and/or rationalizations. Internal compensation arrangements and outside pressure from analysts both fall under “incentives and/or pressure.” Dykes does not identify attitudes and/or rationalizations that would result in fraud.
This question tested from Session 7, Reading 30, LOS c Part 2) After making the appropriate adjustments to equity, the value of owners’ equity at Moonshine is closest to: A) +$230 million. B) +$100 million. C) +$80 million. D) –$20 million.
The correct answer was D) –$20 million. Equity should be adjusted by: LIFO reserve | +10 | Goodwill | -150 | Market value of long-term debt | -100 | Deferred taxes | +20 | Total adjustment | -220 |
Since owners’ equity is $200 million, the adjustment brings it down to –$20 million. Leases are not an adjustment to equity. This question tested from Session 7, Reading 30, LOS c Part 3) Which of the following is least likely to be considered a warning sign of aggressive revenue recognition? A) Bill and hold arrangements. B) Capital-type leases. C) Recognizing revenue from barter transactions with third parties. D) Sales-type leases.
The correct answer was B) Capital-type leases. Sales-type leases in which the lessor recognizes a sale at the inception of the lease can be used to book revenue too soon. Capital-type leases do not have this impact because they recognize revenue over the life of the lease. Bill and hold arrangements and recognizing revenue from barter transactions can also be used to manipulate revenue.
This question tested from Session 7, Reading 30, LOS c Part 4) Are Spindrift’s and Dyke’s statements about earnings manipulation at Sunbeam correct?
| Spindrift | Dykes | A) | Incorrect | Correct | B) | Incorrect | Incorrect | C) | Correct | Correct | D) | Correct | Incorrect |
The correct answer was A) Incorrect Correct Spindrift’s statement is incorrect. Receivables and inventories increasing faster than sales was a sign of earnings manipulation at Sunbeam. Sales increasing faster than receivables and inventories can be a sign of more efficient operations. Dykes’ statement is correct.
This question tested from Session 7, Reading 30, LOS c Part 5) The correct adjustments for PP&E and long-term debt would be closest to:
| PP&E | Long-term debt | A) | +$125 | +$125 | B) | −$125 | −$125 | C) | +$125 | +$225 | D) | −$125 | +$100 |
The correct answer was C) +$125 +$225 PP&E would be adjusted up by the $125 present value of long-term leases for a total value of $425 + $125 = $550. Long-term debt would be calculated at market value and adjusted up for the present value of long-term leases: $500 + $125 = $625 relative to a reported value of $400, for an adjustment of +$225.
This question tested from Session 7, Reading 30, LOS c Part 6) Which of the following was least important as a warning sign of earnings manipulation at Enron in its financial statements for the fiscal year 2000? A) Use of the equity method to account for investments and reporting pro-rata earnings of the investee in net income. B) Related party transactions in which an Enron employee served as general partner in limited partnerships engaging in transactions with Enron. C) Sales of securitized assets at inflated values to SPEs. D) Senior management’s compensation was based mostly on bonus and stock awards. The correct answer was A) Use of the equity method to account for investments and reporting pro-rata earnings of the investee in net income. In the equity methods, the pro-rata earnings of the investee are correctly reported in net income. Enron’s misuse of the equity method involved reporting the investments at fair value, not including pro-rata earnings in net income. The other statements are all examples of red flags in Enron’s fiscal year 2000 financial statements.
This question tested from Session 7, Reading 30, LOS c
[此贴子已经被作者于2008-5-17 17:49:37编辑过] | 
发表于 2008-5-17 17:32
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