35 Free Test Bank for Forensic Accounting by Rufus 

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Which of the following exemplifies the role of an external auditor?

•  A) Victor recorded the transactions entered in to by Trident, Inc. in the proper accounting period.
•  B) Victor prepared the annual budget of Trident, Inc., and he also helped the department heads prepare budgets for each department.
•  C) Victor evaluated the internal controls of Trident, Inc. and reported on the financial position as at the year end.
•  D) Victor conducted an investigation into the affairs of Trident, Inc. to allay suspicions of mismanagement of funds.

The internal auditor's functions exist to support the other three representatives of an organization:

•  A) the board of directors, executive management, and the external auditor.
•  B) the board of directors, executive management, and the transactional accountant.
•  C) the transactional accountant, board of directors, and the external auditor.
•  D) the transactional accountant, executive management, and the external auditor.

Which of the following is a technique of fraud detection?

•  A) perception of detection
•  B) analysis of financial statement
•  C) preemployment screening
•  D) evaluation of hiring practices

Which of the following is the objective of an external auditor?

•  A) form an opinion on the overall financial statements taken as a whole
•  B) capture and record all economic transactions of the organization
•  C) ensure compliance with policy and procedures; offer recommendations for improvement of internal controls
•  D) address a specific question/issue

Which of the following forensic accounting services primarily focuses on determining who committed the fraud, the scheme of the fraud, the time frame and duration, how much was taken, and who else was involved?

•  A) fraud detection
•  B) fraud deterrence
•  C) fraud examination
•  D) fraud anticipation

Which of the following is NOT the primary focus of a fraud examination by a forensic accountant?

•  A) Who committed the fraud?
•  B) How was the fraud committed?
•  C) When was the fraud committed?
•  D) Why was the fraud committed?

Which of the following best describes the term forensic accounting?

•  A) It is a discipline that deals with the preparation and analysis of financial statements of companies.
•  B) It is the use of accounting principles to consolidate financial statements of foreign corporations.
•  C) It is a discipline that primarily deals with methods of preparation of financial budgets of a company.
•  D) It is the use of accounting theories, principles, or analyses in a legal action, often through expert witness testimony.

Which of the following is a process flowing from a set of specific observations, facts, or data to a working hypothesis and then a general conclusion?

•  A) intuitive reasoning
•  B) inductive reasoning
•  C) deductive reasoning
•  D) critical reasoning

In 2008, the sales of the Trident Inc. went up by 10% and its stock prices increased by 20%. In 2010, the sales of the Trident Inc. went up by 15% and its stock prices increased by 30%. You conclude that in 2013, since the sales increased by 5%, the stock price will increase by 10%. Which type of reasoning are you using?

•  A) deductive reasoning
•  B) intuitive reasoning
•  C) suggestive reasoning
•  D) inductive reasoning

Which of the following is a difference between an external auditor and a forensic accountant?

•  A) An external auditor captures and records all economic transactions of the organization, whereas a forensic accountant ensures compliance with policy and procedures.
•  B) An external auditor manages the organization's accounting and internal control system, whereas a forensic accountant validates effectiveness of controls in various processes or areas of the organization.
•  C) An external auditor adds credibility to reported financial information, whereas a forensic accountant provides assurance that management is adequately identifying and mitigating risks.
•  D) An external auditor forms an opinion on the overall financial statements taken as a whole, whereas a forensic accountant addresses a specific question/issue.

Which of the following is true of an internal auditor?

•  A) The responsibilities of an internal auditor extend beyond the processing functions of a transactional accountant.
•  B) A qualified opinion from the internal auditor adds credibility to the organization and its financial statements.
•  C) The internal auditor issues reports that are used by the stakeholders and other users to understand the financial statements of an organization.
•  D) The budgets, cash flow statements, income statement, and balance sheet of an organization is prepared by the internal auditor.

All birds have wings. Kiwis have wings. Which of the following can be concluded using deductive reasoning?

•  A) Kiwis are birds.
•  B) No conclusion can be obtained.
•  C) All birds are Kiwis.
•  D) Kiwis can fly.

Which of the following exemplifies the role of an internal auditor?

•  A) Chloe classifies the transactions of Pole Star, Inc. and records it in the books of accounts.
•  B) Chloe reports on the sufficiency of the insurance policies taken out on the assets of Pole Star, Inc.
•  C) Chloe reports on the financial position of Pole Star, Inc. at the end of the accounting period.
•  D) Chloe assists the management of Pole Star, Inc. to determine the taxes and tax benefits..

Which of the following shows Paul, a forensic accountant, indicating an intellectually curious mindset?

•  A) He relies on the reports given by the management to form an opinion on the financial viability of the business.
•  B) He bases his judgments on the existing industry standards and not on the environment in which the organization operates.
•  C) He gives room for the possibility that mistakes maybe attributable to negligence.
•  D) He questions his understanding of an issue, in spite of being an expert in the field.

Which of the following statement is true of forensic accountants?

•  A) They should have a reactive mindset.
•  B) They should focus their investigations on numbers rather than looking beyond them.
•  C) They should embrace systematic thinking.
•  D) They must trust their preexisting judgments.

Which of the following is a primary responsibility of a testifying expert?

•  A) to render an opinion that will assist the judge in understanding the evidence
•  B) to render an opinion that will assist the attorney in advocating for the client
•  C) to render an opinion that will assist the attorney in understanding the evidence
•  D) to render an opinion that will assist the trier of fact in reaching a judgment

All kids like Jelly Bean. Sam is a kid. Therefore, we can conclude that Sam likes Jelly Bean. Which type of reasoning does this indicate?

•  A) intuitive reasoning
•  B) inductive reasoning
•  C) deductive reasoning
•  D) critical reasoning

Which of the following defines the term deductive reasoning?

•  A) It is defined as reasoning from the general to the specific.
•  B) It is defined as reasoning from a logically valid conclusion to the premises.
•  C) It is defined as generalizing results to arrive at a valid conclusion.
•  D) It is defined as reasoning from particular facts to general conclusions.

The purpose of the ________ is to form and express an opinion as to whether the organization's financial statements, taken as a whole, reflect its financial position on a given date and the results of its operations for a given period.

•  A) forensic accountant
•  B) external auditor
•  C) transactional accountant
•  D) internal auditor

Which of the following is most likely a short-term strategy for fraud deterrence?

•  A) financial statement analysis
•  B) employee invigilation
•  C) time series analysis
•  D) evaluation of hiring practices

Which of the following situations shows Kelcie, a forensic accountant, exercising professional skepticism?

•  A) Kelcie argues that the immediate previous year's records serve as a better basis for the investigation than the earlier years.
•  B) Kelcie believes that the reputation of the external auditor is an indicator of the reliability of the audit report.
•  C) Kelcie believes in the phrase "guilty, until proved otherwise" and does not presume innocence until she has reasonable doubt.
•  D) Kelcie verifies the reports given by the internal auditor against available evidence before using it in her reports.

A ________ records, classifies and summarizes the financial transactions a company.

•  A) transactional accountant
•  B) internal auditor
•  C) external auditor
•  D) management accountant

Which of the following is recognized as the first forensic accountant?

•  A) Frank J. Wilson
•  B) Maurice Peloubet
•  C) Alphonse Capone
•  D) Leslie A. Shuway