Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Question
Chapter 4, Problem 4.1E
To determine
Occupational fraud: Occupational fraud, refers to the fraud carried out intentionally by the professional for personal benefits, by misstating the information in the accounting statements.
To State: Whether the answer for the given statements are true or false.
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Below are several statements about occupational fraud.1. For most large companies, occupational fraud is minimal and internal control procedures are unnecessary.2. Managers have a variety of reasons for manipulating the numbers in financial statements, such as maximizing their compensation, increasing the company’s stock price, and preserving their jobs.3. Internal control procedures include formal policies and procedures related to (1) safeguarding the company’s assets and (2) improving the accuracy and reliability of accounting information.4. “Cooking the books” is a phrase used by accountants to indicate the preparation of financial statements that are free of manipulation.5. Most occupational fraud cases involve misuse of the company’s resources.6. Common types of financial statement fraud include creating fictitious revenues from a fake customer, improperly valuing assets, hiding liabilities, and mismatching revenues and expenses.Required:State whether the answer to each of the…
There are two common causes of business and accounting fraud:• A failure of individual character• A culture of greed or ethical indifference within an organizationWrite a brief memo describing how these two factors could lead to accountingfraud.
Two very common ways that employees commit fraud against their employers is the misstatement of reimbursable expense accounts and the misuse of office supplies for personal purposes. Although these schemes are usually not individually significant, their magnitude can be damaging if these practices are widespread. Please comment on these types of fraud (and other examples of employee fraud) and what internal controls they would put in place in an organization to curb this activity.
Chapter 4 Solutions
Financial Accounting
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - What is meant by the fraud triangle, and what can...Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - What is meant by separation of duties?Ch. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - 22.What are two primary reasons that the companys...Ch. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Describe how management maintains control over...Ch. 4 - Prob. 27RQCh. 4 - Describe the operating, investing, and financing...Ch. 4 - Why is an analysis of the companys cash balance...Ch. 4 - We compared Regal Entertainment and Cinemark at...Ch. 4 - Prob. 4.1BECh. 4 - Match each of the following components of internal...Ch. 4 - Prob. 4.3BECh. 4 - Prob. 4.4BECh. 4 - During the year, the following sales transactions...Ch. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - On January 12, Ferrell Incorporated obtains a...Ch. 4 - Prob. 4.17BECh. 4 - For each company, calculate the ratio of cash to...Ch. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Below are several amounts reported at the end of...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Below are cash transactions for Goldman...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Consider the following information: 1.Service...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Prob. 4.5APCh. 4 - Prob. 4.1BPCh. 4 - Prob. 4.2BPCh. 4 - Prob. 4.3BPCh. 4 - Prob. 4.4BPCh. 4 - Prob. 4.5BPCh. 4 - An examination of the cash activities during the...Ch. 4 - Prob. 4.2APFACh. 4 - Prob. 4.3APFACh. 4 - Prob. 4.4APCACh. 4 - Prob. 4.5APECh. 4 - Prob. 4.7APWC
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Internal control is said to be the backbone of all businesses. Which of the following is the best description of internal controls? A. Internal controls ensure that the financial statements published are correct. B. The only role of internal controls is to protect customer data. C. Internal controls and company policies are important to protect and safeguard assets and to protect all company data and are designed to protect the company from fraud. D. Internal controls are designed to keep employees from committing fraud against the company.arrow_forward1. Distinguish between exposure and risk. 2. Explain the characteristics of management fraud. 3. Why are the computer ethics issues of privacy, security, and property ownership of interest to accountants? 4. Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect. Please provide me a correct answer and PLEASE NO PLAGIARSIM. Thank you.arrow_forwardDistinguish between financial accounting and managerial accounting as to user groups and time horizons. Why should the chief accountant of an organization have a clear understanding of both financial and managerial accounting? How did the internal control procedure of separation of duties fail to detect the fraudulent behavior in problem 1-28b on page 51? Consider the elements of the fraud triangle and explain how each element is present in this problem.arrow_forward
- What is the concept behind separation of duties in establishing internal control? a. Employee fraud is less likely to occur when access to assets and access to accounting records are separated. b. The company’s financial accountant should not share information with the company’s tax accountant. c. Duties of middle-level managers of the company should be clearly separated from those of top executives. d. The external auditors of the company should have no contact with managers while the audit is taking place.arrow_forwardCressey’s “fraud triangle” states that three factors—non-shareable financial need, perceived opportunity, and rationalization—are present in cases of occupational fraud. Which of these three factors, if any, is the most important in causing executives, managers, and employees to commit occupational fraud?arrow_forwardResearch a company that had a fraud event happen due to inadequate accounting procedures. Review the fraud event that happened in the company in detail and identify at least two accounting control procedures that were deficient in this event. Propose an internal control system that would have eliminated the fraud, using the ERP system.arrow_forward
- A code of ethics is an important element of a fraud prevention program. Which of the following would diminish the effectiveness of a company’s code of conduct?a. The establishment of a chief ethics officer.b. The establishment of a hotline for reporting unethical behavior.c. The violation of the code of ethics by senior management.d. The posting of the code of ethics in the company workplace.arrow_forwardResearch has shown that situational pressures and opportunity are factors that contribute to fraudulent behavior. a. Identify two situational pressures in a public company that would increase the likelihood of fraud. b. Identify three opportunity situations that would increase the likelihood of fraud.arrow_forward
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