Forensic Accounting · Topic 3

Financial Statement Fraud and Asset Misappropriation Quiz

Work through 25 multiple-choice questions, one at a time. Submit each answer for feedback. At the end, review your score and see which concepts to revisit.

Review the Q&AForensic Accounting quiz path
1. December revenue includes invoices for goods still held for the seller with no qualifying bill-and-hold terms. Which concept best fits the case?
2. A cashier pockets cash before any sale enters the till. Which concept best fits the case?
3. A payroll clerk retains a departed employee on payroll and redirects the deposit. Which concept best fits the case?
4. Management transfers routine repair charges into machinery cost without qualifying support. Which concept best fits the case?
5. An employee uses a company card for unrelated personal purchases. Which concept best fits the case?
6. December revenue includes invoices for goods still held for the seller with no qualifying bill-and-hold terms. What is the most appropriate next step?
7. A cashier pockets cash before any sale enters the till. What is the most appropriate next step?
8. A payroll clerk retains a departed employee on payroll and redirects the deposit. What is the most appropriate next step?
9. Management transfers routine repair charges into machinery cost without qualifying support. What is the most appropriate next step?
10. An employee uses a company card for unrelated personal purchases. What is the most appropriate next step?
11. December revenue includes invoices for goods still held for the seller with no qualifying bill-and-hold terms. Which evidence would be most directly useful?
12. A cashier pockets cash before any sale enters the till. Which evidence would be most directly useful?
13. A payroll clerk retains a departed employee on payroll and redirects the deposit. Which evidence would be most directly useful?
14. Management transfers routine repair charges into machinery cost without qualifying support. Which evidence would be most directly useful?
15. An employee uses a company card for unrelated personal purchases. Which evidence would be most directly useful?
16. December revenue includes invoices for goods still held for the seller with no qualifying bill-and-hold terms. Which conclusion is best supported?
17. A cashier pockets cash before any sale enters the till. Which conclusion is best supported?
18. A payroll clerk retains a departed employee on payroll and redirects the deposit. Which conclusion is best supported?
19. Management transfers routine repair charges into machinery cost without qualifying support. Which conclusion is best supported?
20. An employee uses a company card for unrelated personal purchases. Which conclusion is best supported?
21. December revenue includes invoices for goods still held for the seller with no qualifying bill-and-hold terms. Which shortcut would most directly undermine the work in this case?
22. A cashier pockets cash before any sale enters the till. Which shortcut would most directly undermine the work in this case?
23. A payroll clerk retains a departed employee on payroll and redirects the deposit. Which shortcut would most directly undermine the work in this case?
24. Management transfers routine repair charges into machinery cost without qualifying support. Which shortcut would most directly undermine the work in this case?
25. An employee uses a company card for unrelated personal purchases. Which shortcut would most directly undermine the work in this case?
Show the answer key
  1. Premature revenue recognition Early recognition may overstate current-period revenue.
  2. Skimming Receipts stolen before recording may leave no ledger entry.
  3. Ghost employee scheme A fictitious payroll entitlement can divert company funds.
  4. Improper capitalization Unsupported capitalization can overstate assets and current profit.
  5. Expense misuse A valid card transaction can still be unauthorized.
  6. Test shipping, contract terms and transfer of control Early recognition may overstate current-period revenue.
  7. Compare independent activity measures with recorded sales Receipts stolen before recording may leave no ledger entry.
  8. Match active payroll to HR records and investigate changes to bank details A fictitious payroll entitlement can divert company funds.
  9. Review additions against the reporting criteria and source invoices Unsupported capitalization can overstate assets and current profit.
  10. Trace card activity to receipts, purpose and approvals A valid card transaction can still be unauthorized.
  11. Dispatch records and customer agreements Test shipping, contract terms and transfer of control.
  12. Customer orders and sequential receipts reconciled to till records Compare independent activity measures with recorded sales.
  13. Termination records, bank-detail changes and payment files Match active payroll to HR records and investigate changes to bank details.
  14. Itemized repair invoices and asset register entries Review additions against the reporting criteria and source invoices.
  15. Merchant receipts, statements and documented business purpose Trace card activity to receipts, purpose and approvals.
  16. Early recognition may overstate current-period revenue Dispatch records and customer agreements would help support that assessment.
  17. Receipts stolen before recording may leave no ledger entry Customer orders and sequential receipts reconciled to till records would help support that assessment.
  18. A fictitious payroll entitlement can divert company funds Termination records, bank-detail changes and payment files would help support that assessment.
  19. Unsupported capitalization can overstate assets and current profit Itemized repair invoices and asset register entries would help support that assessment.
  20. A valid card transaction can still be unauthorized Merchant receipts, statements and documented business purpose would help support that assessment.
  21. Using invoice dates alone as proof control transferred Early recognition may overstate current-period revenue.
  22. Searching only recorded refunds for the missing cash Receipts stolen before recording may leave no ledger entry.
  23. Accepting an active payroll ID as proof of employment A fictitious payroll entitlement can divert company funds.
  24. Treating every large repair as a new asset Unsupported capitalization can overstate assets and current profit.
  25. Treating issuer approval as internal approval A valid card transaction can still be unauthorized.

These hypothetical cases use general forensic accounting principles. For real engagements, check the rules and standards that apply in your jurisdiction. AICPA Statement on Standards for Forensic Services