Question 1

Which of the following is a difference between an internal auditor and an external auditor?
A) An internal auditor conducts the audit because a deficiency has been identified, whereas an external auditor conducts audits on a recurring basis.
B) An internal auditor manages accounting and internal control of an organization, whereas an external auditor examines the financial data of an organization.
C) An internal auditor's reports are used by the users of the financial statements, whereas the external auditor's reports are used by the management and internal auditor.
D) An internal auditor reports on the level of compliance with a company's internal policies, whereas the external auditor reports on the level of compliance with external laws and regulations.

Accepted Answer

The answer of Which of the following is a difference...

Question 2

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

Accepted Answer

The objective of an external auditor is to form an opinion on the overall financial statements taken as a whole. This opinion provides assurance to the users of the financial statements on the fairness of the information presented. Option B is the objective of an accounting department, option C is the objective of an internal auditor, and option D is the objective of a consulting engagement.

Question 3

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.

Accepted Answer

The main difference between an external auditor and a forensic accountant is that an external auditor gives an opinion on the overall financial statements taken as a whole, whereas a forensic accountant addresses a specific question or issue. External auditors test the organization's accounting and internal control system to ensure compliance with accounting principles and standards, whereas forensic accountants validate the effectiveness of controls in various processes or areas of the organization to detect fraud, financial irregularities, and other illegal activities. Therefore, option D is the correct answer.

Question 4

Which of the following is true of transactional accountants?
A) They evaluate the internal control systems of an organization and test the accounts to ensure that all economic events are recorded and reported properly.
B) They form and express an opinion as to whether an 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.
C) They report on the adequacy of internal controls, the accuracy and propriety of transactions.
D) They employ generally accepted accounting principles (GAAP) to process information useful in decision making.

Accepted Answer

The answer of Which of the following is true of...

Question 5

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.

Accepted Answer

Deductive reasoning is the process of reasoning from general principles or rules to specific instances. This means that starting with a general statement or principle, one applies it to a specific situation to arrive at a conclusion.

Question 6

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

Accepted Answer

Fraud examination 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. Fraud detection and fraud deterrence are more focused on preventing and detecting fraud before it happens. Fraud anticipation involves identifying potential fraud risks and developing strategies to prevent them.

Question 7

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..

Accepted Answer

The role of an internal auditor is to assess and evaluate the effectiveness of a company's risk management, internal control, and governance processes. Reporting on the sufficiency of insurance policies relates to the assessment of risk management, which is within the scope of the internal auditor's role.

A, C, and D relate to tasks that are typically performed by an accountant or a financial analyst, which are different roles from that of an internal auditor.

Question 8

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.

Accepted Answer

An external auditor is responsible for evaluating the internal controls of a company and reporting on the financial position at the end of the year. Choice A is the role of an internal auditor, as they are responsible for recording transactions. Choice B is the role of a financial analyst or budget planner. Choice D is the role of an investigative auditor.

Question 9

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.

Accepted Answer

The internal auditor's functions are meant to support the board of directors, executive management, and the external auditor. This is because the internal auditor provides assurance and consulting services to help these representatives ensure that the organization's operations are effective, efficient, and aligned with its objectives. The transactional accountant may be involved in the internal audit process, but the primary focus of the internal auditor is on providing independent and objective assessments of the organization's risk management, control, and governance processes.

Question 10

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

Accepted Answer

Inductive reasoning is the process of moving from specific observations or data to a more general conclusion or hypothesis. This differs from deductive reasoning, which starts with a general principle and applies it to a specific case. Intuitive reasoning and critical reasoning are broad terms that can encompass both inductive and deductive reasoning, but do not specifically refer to the process described in the question.

Question 11

Which of the following is the most significant practice component of forensic accounting As indicated by the results of a 2011 AICPA survey?
A) bankruptcy
B) business valuations
C) insolvency and reorganization
D) computer forensic analysis

Accepted Answer

The answer of Which of the following is the most...

Question 12

Which of the following forensic accounting investigation services includes proactive employee strategies such as preemployment screening, employee training, and employee monitoring strategies?
A) fraud detection
B) fraud deterrence
C) fraud examination
D) fraud anticipation

Accepted Answer

Fraud deterrence includes proactively implementing strategies to prevent fraud, such as preemployment screening, employee training, and employee monitoring. Fraud detection involves identifying existing fraud, fraud examination involves investigating suspected fraud, and fraud anticipation involves predicting and preparing for future fraud risks.

Question 13

A ________ records, classifies and summarizes the financial transactions a company.
A) transactional accountant
B) internal auditor
C) external auditor
D) management accountant

Accepted Answer

The answer of A ________ records, classifies and summarizes the...

Question 14

All clouds are white. Some clouds are round. Which of the following can be concluded using deductive reasoning?
A) Some clouds are white.
B) No conclusion can be obtained.
C) White clouds are round.
D) Round clouds are white.

Accepted Answer

The answer of All clouds are white. Some clouds are...

Question 15

Which of the following are the two major components of forensic accounting services?
A) fraud detection services and fraud deterrence services
B) expert services and consulting services
C) investigative services and litigation services
D) fraud examination services and business valuations services

Accepted Answer

The two major components of forensic accounting services are investigative services and litigation services. Investigative services involve the detection and prevention of financial fraud, while litigation services involve providing expert testimony and evidence in legal proceedings related to financial disputes. While the other options may also be included in forensic accounting services, they are not the two major components as specified in the question.

Question 16

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

Accepted Answer

The role described is that of an external auditor, whose primary purpose is to provide an opinion on the fairness of an organization's financial statements. Forensic accountants focus on investigating potential fraud or financial crimes, transactional accountants primarily handle day-to-day financial transactions, and internal auditors monitor an organization's internal controls and risk management.

Question 17

Which of the following best describes a whistle blower complaint?
A) It is an informal disclosure of personal issues of an employee with other employees within an organization.
B) It is a disclosure by a person of wrong doing or misconduct within an organization.
C) It is an annual complaint forum designed to discuss issues of an organization.
D) It is a complaint raised by the SEC toward an organization.

Accepted Answer

A whistleblower complaint is a disclosure by a person of wrongdoings, violations, or misconduct within an organization to an authority or regulatory agency. It is usually made in good faith and in the interest of the public or the organization.

Question 18

Which of the following is a proactive employee strategy of fraud deterrence?
A) perception of detection
B) analysis of financial statement
C) analysis of statistical data
D) employee contracts

Accepted Answer

Perception of detection is a proactive strategy because it involves creating an environment where employees believe fraudulent activities will be detected. This can deter them from committing fraud in the first place.

Question 19

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

Accepted Answer

This is an example of deductive reasoning where a general statement (all kids like Jelly Bean) is used to draw a specific conclusion about an individual (Sam).

Question 20

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.

Accepted Answer

Internal auditors have a wider range of responsibilities than just processing transactions, such as reviewing internal controls and risk management. However, the preparation of financial statements is typically the responsibility of the external auditor or the company's accounting department, not the internal auditor. A qualified opinion from the external auditor adds credibility to the financial statements, not the internal auditor. While internal audit reports are important, they are not typically used by stakeholders to understand financial statements.

Quiz 1: Introduction to the World of Forensic Accounting

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

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

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

Which of the following is true of transactional accountants?

Which of the following defines the term deductive reasoning?

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?

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

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

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

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?

Which of the following is the most significant practice component of forensic accounting As indicated by the results of a 2011 AICPA survey?

Which of the following forensic accounting investigation services includes proactive employee strategies such as preemployment screening, employee training, and employee monitoring strategies?

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

All clouds are white. Some clouds are round. Which of the following can be concluded using deductive reasoning?

Which of the following are the two major components of forensic accounting services?

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.

Which of the following best describes a whistle blower complaint?

Which of the following is a proactive employee strategy of fraud deterrence?

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?

Which of the following is true of an internal auditor?