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Q6. Page observes in Best Made’s financial statements that for the past three years, the company has sold more inventory than it
produced. Best Made is most likely attempting to manipulate its reported earnings by utilizing which of the following methods?
A) Utilizing LIFO liquidations.
B) Creating “cookie jar” reserves.
C) Delaying expense recognition.
Q7. With regards to SAS No. 99 and the “fraud triangle”, which of the following statements regarding the conditions that may lead to
fraudulent financial reporting is most accurate?
A) An opportunity to commit financial statement fraud when there is a company mindset that fraudulent behavior is justified.
B) There is often pressure to commit financial statement fraud when there is a weakness in the company’s internal control system.
C) Both external and internal incentives and pressures are the motives that lead management to commit financial statement fraud.
Q8. The nature of a firm’s industry or operations can lead to the existence of opportunities to commit fraud. Which of the following
risk factors are related to opportunities to commit fraud?
A) Management being dominated by a single person or small group.
B) Significant related party transactions, especially when those parties are audited by another firm.
C) Ineffective oversight by the board of directors or audit committee.
Q9. Earlier this year, Barracuda Company issued 5,000 employee stock options. Recently, 2,000 options were exercised at a price
of $10 per share. To avoid dilution, Barracuda purchased 2,000 shares at an average price of $12 per share. Barracuda
reported both transactions as financing activities in its cash flow statement. For analytical purposes, what adjustment is
necessary to better reflect the substance of the stock repurchase?
Operating cash flow Financing cash flow
A) Decrease $4,000 Increase $4,000
B) Decrease $4,000 No adjustment
C) No adjustment Increase $4,000
Q10. Glenmark Blades and Propellers has set up special purpose entities to handle its manufacturing. The company does not
consolidate those entities. Glenmark is most likely obeying:
A) neither the spirit of the law nor the letter of the law.
B) the spirit of the law but not the letter of the law.
C) the letter of the law but not the spirit of the law.
Q11. Samson Therapeutics records all leases as operating leases. The company most likely wanted to reduce:
A) leverage.
B) expenses.
C) inventory.
Q12. Joe Carter, CFA, believes Triangle Equipment, a maker of large, specialized industrial equipment, has overstated the salvage
value of its equipment. This would:
A) overstate earnings.
B) overstate liabilities.
C) understate earnings.
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发表于 2009-3-3 09:56
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