1. (TCO 5) The three main components of the fraud triangle are (Points : 3) rationalization, opportunity, and greed. opportunity, motive, and lack of ethics. motive, opportunity, and rationalization. None of the above Question 2. 2. (TCO 5) Fraudulent financial reporting (Points : 3) is committed by lower level employees of a company. makes the company appear in poor financial condition. deceives investors and creditors. involves stealing cash or inventory from the company Question 3. 3. (TCO 5) The primary way that fraud is prevented and detected is through a proper system of (Points : 3) checks and balances. management directives. internal control. internal and external audits. Question 4. 4. (TCO 5) The “tone at the top” (Points : 3) is a component of the control procedures. starts with low level employees. means that owners and top managers must behave honorably to set a good example for employees. is set by the PCAOB. Question 5. 5. (TCO 5) The information system component of internal control (Points : 3) ensures that every system that processes accounting data should have the ability to capture transactions as they occur. monitors controls. offers hints of where fraud or errors could occur. ensures that the IT department has adequate control procedures in place to ensure that no one can hack into the company’s database. Question 6. 6. (TCO 5) _____ rearranges messages by a mathematical formula making the message impossible to read by someone who does not know the code.(Points : 3) Encryption Firewall Security wall Access device Question 7. 7. (TCO 5) When preparing a bank reconciliation, which of the following items should be added to the book balance? (Points : 3) EFT receipts Deposits in transit Collection items Both EFT receipts and collection items Question 8. 8. (TCO 5) Which of the following is an accurate statement regarding cash receipts over the counter? (Points : 3) The point-of-sale terminal electronically transmits a record of the sale to the store’s main computer. Employees should take the deposit to the bank. The cashier should reconcile the electronic record of the sales per the terminal to the record of cash received. Point-of-sale terminals cannot assist in inventory control. Question 9. 9. (TCO 5) Short-term investments(Points : 3) are reported after accounts receivable on the balance sheet. are more liquid than cash. are reported at historical cost on the balance sheet. include trading securities.