4.2 Define fraud and describe the different types of fraud in business
1) An organization's employees are usually responsible for fraud that is committed by a business organization.
2) In a broad sense, fraud is the use of deception or trickery for personal gain.
3) Fraud is always committed against an organization.
4) The goal of overstating earnings by using fraud is:
A) to deflate the amount of taxes the corporation pays.
B) to overstate the cost of goods sold.
C) that it may help to increase the stock price of the company.
D) to overstate receivables.
E) to deflate accounts payable.
5) Fraudulent financial reporting typically involves:
A) management.
B) employees.
C) the board of directors.
D) the shareholders.
E) employees and their friends.
6) Besides using an overstatement of earnings to inflate a company's share price, overstating earnings may also be used to:
A) deflate the amount of taxes the corporation pays.
B) avoid paying raises to employees.
C) ensure larger bonuses to upper management at year-end.
D) avoid paying dividends to shareholders.
E) avoid bonuses to management.
7) An employee may embezzle by taking bribes or kickbacks from:
A) suppliers.
B) customers.
C) both suppliers and customers.
D) shareholders of the company.
E) management.
8) Embezzlement usually involves the misappropriation of business:
A) equity by an employee.
B) liabilities by an employee.
C) assets by an employee.
D) information by an employee.
E) equity by non-employees.
9) The primary form of fraud committed against an organization is usually done by __________.
10) Recording assets that the company does not possess is an example of: __________.