Question 1

Public recodes EXCLUDE information about:

Accepted Answer

Public records do not include credit history on individuals.

Question 2

Generally, in order to pursue a claim for legal damages successfully, the injured party must prove:

Accepted Answer

In order to pursue a claim for legal damages successfully, the injured party must prove both liability and damages. Liability means demonstrating that the defendant was responsible for the injuries or damages suffered by the plaintiff, while damages refer to the actual harm suffered by the plaintiff as a result of the defendant's actions. Failure to prove either element may result in the claim being dismissed or the plaintiff being awarded a reduced amount of damages.

Question 3

________ requires an estimate of future earnings or cash flows, a sense of the duration of those, and the derivation of an appropriate risk adjusted discount rate.

Accepted Answer

The discounted earnings or cash flows method (DCF) is the best choice because it requires the estimation of future earnings or cash flows, a determination of the duration of those, and the usage of a suitable risk-adjusted discount rate. This technique considers the time value of money, future uncertainties, and the projected stream of cash flows to assess the investment's true worth.

Question 4

Which of the following is a concern in determining incremental costs?

Accepted Answer

All the options listed are concerns in determining incremental costs. 
- Allocated costs need to be separated from the costs directly related to the decision being made. 
- Accounting estimates can be inaccurate and affect the accuracy of the incremental costs calculated. 
- Time value of money needs to be taken into consideration as the value of money changes over time.

Question 5

Valuations can be developed to address a number of issues. For example, they may help facilitate asset transfers by helping to determine value for all the following EXCEPT:

Accepted Answer

Valuations are typically used to determine the value of assets for purposes such as asset liquidations, mergers and acquisitions, and bankruptcy proceedings. They are not typically used to determine the longevity of the CEO.

Question 6

The accepted concept for measuring lost revenues or excess expenses over a loss period:

Accepted Answer

The accepted concept for measuring lost revenues or excess expenses over a loss period is to project incremental lost sales or increased expenses. This involves estimating the amount of revenue or expenses that would have been generated in the absence of the loss event. This approach focuses on the incremental impact of the loss event on the company's financial performance. Validating opportunity costs or sunk costs would not be relevant in this situation, and the fair value of assets may not be directly related to the impact of the loss event.

Question 7

________ value assumes a specific buyer or class of buyers. This may dictate the type of use that the buyers have for the assets and thus may create a price that is something other than market value or fair market value.

Accepted Answer

Investment value is based on the specific needs and objectives of a particular investor and may deviate from market value or fair market value due to factors such as tax implications, strategic fit, or synergies with other assets. This type of value is most relevant in mergers and acquisitions or other investment decisions. The other options (A, B, C) do not involve considerations of specific buyers or investors.

Question 8

________ value represents the amount of cash likely to be received by owners of an asset, assuming that pressure exists that will require the sales transaction to be completed quickly.

Accepted Answer

Liquidation value represents the cash value that can be realized by selling an asset quickly, as opposed to its book value (which is what the company paid for it) or market value (which is what it could sell for under normal circumstances). This value is often used to determine the minimum value of an asset, as it assumes a worst-case scenario where the owner must sell quickly, usually due to financial distress.

Question 9

Generally, damages result from a:

Accepted Answer

Both torts and breaches of contract can result in damages. Torts are civil wrongs that cause harm to someone's person, property, or reputation and can result in damages for those harms. Breach of contract occurs when one party fails to perform their obligations under a contract, which can result in damages for the other party's losses incurred as a result of the breach. Therefore, damages can result from either torts or breaches of contract.

Question 10

Risk and return are ________ related.

Accepted Answer

Risk and return are positively related, meaning as the level of risk increases, the potential return also increases. This relationship is central to the concept of investing, as investors must balance their desired level of return with their tolerance for risk.

Question 11

The venues where the fraud examiner or forensic accountant can expect to be evaluated, scrutinized, challenged, etc. excludes the following:

Accepted Answer

The FASB (Financial Accounting Standards Board) does not typically evaluate or scrutinize fraud examiners or forensic accountants. The other options listed involve situations where the work of these professionals may be evaluated or challenged.

Question 12

The Accredited Senior Appraiser's ASA's Principles of Appraisal Practice suggests the following items be included from a valuation report with the exception of:

Accepted Answer

The ASA's Principles of Appraisal Practice do not require an opinion from the Financial Accounting Standards Board (FASB) to be included in a valuation report. The other options (A, B, and C) are all recommended components of a valuation report.

Question 13

________ value represents an asset's balance sheet value, derived by subtracting accumulated deprecation from historical acquisition cost.

Accepted Answer

Book value is calculated by subtracting the accumulated depreciation from the historical acquisition cost of an asset. This value represents the amount that the asset is worth on the balance sheet. Liquidation value is the amount that an asset is expected to generate in a quick sale, while market value is the current value of the asset in its respective market. Investment value is the value of an asset to a particular investor or entity.

Question 14

CPAs may provide consulting services that are concerned with fraud but are not necessarily fraud examination services, auditing, or litigation support services. These might include all EXCEPT:

Accepted Answer

CPAs may provide consulting services related to fraud, but bookkeeping services are not considered among these types of services. The other options, assessing risks of fraud and illegal acts, evaluating internal control systems, and preparing codes of business ethics and conduct are all valid consulting services related to fraud.

Question 15

Some of the methods that can be used to develop estimates of lost sales and incremental expenses include:

Accepted Answer

Both the Before and After Method and the Benchmark "Yardstick" Method can be effective in developing estimates of lost sales and incremental expenses. The Before and After Method involves comparing sales and expenses before and after a specific event (such as a price or product change) to determine the impact on lost sales and incremental expenses. The Benchmark "Yardstick" Method involves using industry benchmarks or competitor data to estimate the impact on sales and expenses. Therefore, either one of these methods can be used to develop estimates, making choice C the best answer.

Question 16

The amount of loss in commercial damages may be affected by all EXCEPT:

Accepted Answer

Compliance with GAAP (Generally Accepted Accounting Principles) does not affect the amount of loss in commercial damages. GAAP is a set of accounting standards and principles used to prepare financial statements, but it does not directly impact the factors that influence commercial damages. The general economy, conditions of the industry, and the damages entity's competitive environment can all affect the amount of loss in commercial damages.

Question 17

________ value is used to describe the price of an asset, assuming that a willing buyer and willing seller can come to terms under normal market conditions.

Accepted Answer

Market value is the price of an asset that would be agreed upon in a transaction between a willing buyer and a willing seller under normal market conditions. This value is based on current market trends and is subject to change over time. Book value refers to the value of an asset according to its balance sheet, while liquidation value is the amount that could be obtained if an asset was sold quickly in a forced sale. Investment value refers to the specific value of an asset to a particular investor based on their individual investment strategy and goals.

Question 18

Generally, all employment benefits are lost when an injury or permanent disability occurs.

Accepted Answer

Depending on the type of disability or injury and the employment contract, some benefits may still be available, such as workers' compensation, disability insurance, or accommodations under the Americans with Disabilities Act. However, this may vary for different employers and circumstances.

Question 19

In a forensic accounting investigation, documents are not only subjected to confirmation with external parties but also subjected to:

Accepted Answer

Fingerprint analysis is a common technique in forensic accounting investigations to determine who handled documents, thereby providing clues about their authenticity or history.

Question 20

Successful plaintiffs may be awarded different types of damages. Which of the following is not considered damages?

Accepted Answer

Emotional damages may be awarded to compensate for the plaintiff's mental distress or anguish. Therefore, all other options are types of damages.

Quiz 15: Consulting, Litigation Support, and Expert Witnesses: Damages, Valuations, and Other Engagements