Chapter 2--Why People Commit FraudStudent: ___________________________________________________________________________1. Which of the following is NOT a common rationalization of fraud perpetrators? A. The organization owes meB. I'm onl !orrowing the mone". No one will get hurt#. I don$t deser%e more. &. Which of the following is NOT a primar control procedure to minimize the occurrence of fraud? A. #ual custodB. 'stems of authorization". Internal audit department#. #ocuments and records (. )ach of the following is an e*ample of an inade+uate control en%ironment ),")-T. A. The /0 department failed to chec1 an applicant's !ac1ground and hired someone who had committed fraud in the past.B. A manager instructs emploees not to share passwords2 and then shares her passwords with others.". A compan does not esta!lish codes of conduct and does not ha%e training meetings to teach emploees to distinguish !etween accepta!le and unaccepta!le !eha%ior.#. The emploees 1now who has responsi!ilit for each !usiness acti%it. 3. A fraud perpetrator uses the float time !etween !an1s to gi%e the impression that he had mone in his accounts. Which crime is he committing? A. 4loatingB. 'trip". 'pinning#. 5iting 6. Which is following o!ser%ations is T07)? A. 0esearch shows that onl people with a criminal mind set can commit fraud.B. 4raud perpetrators usuall can !e distinguished from others on the !asis of demographic characteristics. ". 8ost fraud perpetrators ha%e profiles that loo1 li1e those of other honest people.#. When fraud does occur2 the most common reaction ! those around the fraud is confession. 9. When management fraud occurs2 companies usuall. A. o%erstate assets and net income.B. understate assets and net income.". o%erstate assets and understate net income.#. understate assets and o%erstate net income. :. Which of the following is NOT one of the 1e elements common to all frauds? A. -ercei%ed pressureB. -ercei%ed ine+ualit". -ercei%ed opportunit#. 0ationalization ;. What is the most important element in a control en%ironment? A. 8anagement's communicationB. 8anagement's role and e*ample". The hiring process#. The internal audit department @5.B. internal !ulletin !oards.". 4orm ;@5.#. 4orm 1>@C. &(. What is the strongest factor in deterring future fraud acti%it? A. Degal prosecution.B. 'anctions.". Termination.#. "ounseling. &3. Which of the following is NOT a true statement? A. Almost e%er fraud in%ol%es rationalization.B. All frauds in%ol%e financial or %ice@related pressures.". -ercei%ed opportunit diminishes when fraud perpetrators are prosecuted. &6. A smart fraudster usuall manipulates which financial record in order to !etter a%oid an audit trail? A. Income statement.B. Balance sheet.". 'tatement of cash flows.#. 'tatement of retained earnings. &9. Which of the following factors creates an opportunit for fraud? A. ?reedB. Di%ing !eond one's means". Dac1 of an audit trail#. The organization owes it to me &:. Which of the following is NOT a common financial pressure associated with fraud? A. Di%ing !eond one's meansB. /igh !ills or personal de!t". -ersonal financial losses#. ?etting e%en with the emploer &;. ?enerall2 internal controls are implemented in a corporation to help pre%ent which element of the fraud triangle? A. -ercei%ed opportunitB. -ercei%ed pressure". 0ationalization#. Authorization &. According to the stud mentioned in the te*t2 which of the following is true a!out fraud perpetrators compared to propert offenders? A. 4raud perpetrators are more li1el to !e caught than propert offendersB. 4raud perpetrators are more educated than propert offenders". 4raud perpetrators are more li1el to !e men than propert offenders#. 4raud perpetrators are much ounger than propert offenders (1. Which of the following creates opportunities for fraud? A. An audit trailB. Ina!ilit to Eudge +ualit of performance". "ontrols that pre%ent or detect fraud#. #isciplining fraud perpetrators (&. Which of the following people is most li1el to ha%e opportunities to commit fraud? A. 0o! is a con%icted !an1 ro!!er who has !een out of Eail for : ears and is wor1ing for a small firm whose manager 1nows a!out 0o!$s criminal !ac1ground.B. Fane is a recent high school graduate who lo%es shopping. 'he is on the loo1 out for a Eo!.". 'te%e was Eust hired ! his compan !ut he is alwas acting suspicious#. 9& ear old #a%e has loall wor1ed up his compan's corporate ladder for the past &3 ears ((. According to the stud mentioned in the te*t2 people who commit fraud are most similar to which of the following groups? A. -ropert offendersB. "ollege students". "on%icted murderers#. -olice officers (3. The theor !ehind BBBBB is that if people 1now their wor1 or acti%ities will !e monitored ! others2 the opportunit to commit and conceal a fraud will !e reduced. A. documentationB. segregation of duties". sstem of authorizations#. independent chec1s (6. Which of the following is usuall the most e*pensi%e of all control procedures? A. #ocuments and recordsB. 'egregation of duties". 'stem of authorizations#. Independent chec1s (9. 'egregation of duties2 as a control procedure2 is most often usedA. when the tas1 in%ol%ed is +uite simple.B. when it is impossi!le for one person to complete a tas1.". when appraisals are conducted.#. when cash is in%ol%ed. (:. #ocuments and records are an important control acti%it. Which of the following statements concerning this acti%it is true? A. The ser%e as e*cellent pre%enti%e controls.B. Ade+uate accounta!ilit can e*ist e%en in their a!sence.". The entire accounting sstem ser%es as a documentar control.#. The are poor detecti%e controls. (;. Which of the following is an e*ample of an authorization control procedure? A. -assword protectionB. -eriodic Eo! rotation". "ash counts#. 'uper%isor re%iew (@5.B. internal !ulletin !oards.C. 4orm ;@5.#. 4orm 1>@C. &(. What is the strongest factor in deterring future fraud acti%it? A. Degal prosecution.B. 'anctions.". Termination.#. "ounseling. &3. Which of the following is NOT a true statement? A. Almost e%er fraud in%ol%es rationalization.B. All frauds in%ol%e financial or %ice@related pressures.". -ercei%ed opportunit diminishes when fraud perpetrators are prosecuted. &6. A smart fraudster usuall manipulates which financial record in order to !etter a%oid an audit trail? A. Income statement.B. Balance sheet.". 'tatement of cash flows.#. 'tatement of retained earnings. &9. Which of the following factors creates an opportunit for fraud? A. ?reedB. Di%ing !eond one's meansC. Dac1 of an audit trail#. The organization owes it to me &:. Which of the following is NOT a common financial pressure associated with fraud? A. Di%ing !eond one's meansB. /igh !ills or personal de!t". -ersonal financial lossesD. ?etting e%en with the emploer &;. ?enerall2 internal controls are implemented in a corporation to help pre%ent which element of the fraud triangle? A. -ercei%ed opportunitB. -ercei%ed pressure". 0ationalization#. Authorization &. According to the stud mentioned in the te*t2 which of the following is true a!out fraud perpetrators compared to propert offenders? A. 4raud perpetrators are more li1el to !e caught than propert offendersB. 4raud perpetrators are more educated than propert offenders". 4raud perpetrators are more li1el to !e men than propert offenders#. 4raud perpetrators are much ounger than propert offenders (1. Which of the following creates opportunities for fraud? A. An audit trailB. Ina!ilit to Eudge +ualit of performance". "ontrols that pre%ent or detect fraud#. #isciplining fraud perpetrators (&. Which of the following people is most li1el to ha%e opportunities to commit fraud? A. 0o! is a con%icted !an1 ro!!er who has !een out of Eail for : ears and is wor1ing for a small firm whose manager 1nows a!out 0o!$s criminal !ac1ground.B. Fane is a recent high school graduate who lo%es shopping. 'he is on the loo1 out for a Eo!.". 'te%e was Eust hired ! his compan !ut he is alwas acting suspiciousD. 9& ear old #a%e has loall wor1ed up his compan's corporate ladder for the past &3 ears ((. According to the stud mentioned in the te*t2 people who commit fraud are most similar to which of the following groups? A. -ropert offendersB. "ollege students". "on%icted murderers#. -olice officers (3. The theor !ehind BBBBB is that if people 1now their wor1 or acti%ities will !e monitored ! others2 the opportunit to commit and conceal a fraud will !e reduced. A. documentationB. segregation of duties". sstem of authorizationsD. independent chec1s (6. Which of the following is usuall the most e*pensi%e of all control procedures? A. #ocuments and recordsB. 'egregation of duties". 'stem of authorizations#. Independent chec1s (9. 'egregation of duties2 as a control procedure2 is most often usedA. when the tas1 in%ol%ed is +uite simple.B. when it is impossi!le for one person to complete a tas1.". when appraisals are conducted.D. when cash is in%ol%ed. (:. #ocuments and records are an important control acti%it. Which of the following statements concerning this acti%it is true? A. The ser%e as e*cellent pre%enti%e controls.B. Ade+uate accounta!ilit can e*ist e%en in their a!sence.C. The entire accounting sstem ser%es as a documentar control.#. The are poor detecti%e controls. (;. Which of the following is an e*ample of an authorization control procedure? A. -assword protectionB. -eriodic Eo! rotation". "ash counts#. 'uper%isor re%iew (