Question 1

Which of the following was not an accounting issue in the Sunbeam case?

Accepted Answer

A)   Cookie jar reserves
B)   Channel stuffing
C)   Bill and hold sales
D)   Swap transactions

Question 2

The best way to characterize the role of Sherron Watkins in the downfall of Enron is:

Accepted Answer

A)   She directed the internal auditors to examine numerous transactions that led to the discovery of the fraud
B)   She gave in to the pressure of Andy Fastow to go along with materially misstated financial statements
C)   She was sent to jail even though she cooperated with the government in its case against Enron
D)   She tried to alert Ken Lay about the accounting scandal at Enron

Question 3

Financial shenanigans involving recording revenue too soon includes all of the following except:

Accepted Answer

A)   Recording revenue when future services are still to be provided
B)   Recording revenue before shipment of a product
C)   Recording revenue after customer acceptance
D)   Recording revenue when the customer is not obligated to pay

Question 4

Needles suggests that making judgments about what earnings management is becomes difficult because:

Accepted Answer

A)   It depends on management's intentions
B)   There is no clear limit beyond which a choice is clearly unethical
C)   A perfectly routine accounting estimate may be illegal and unethical
D)   All of the above

Question 5

Inherent risk refers to:

Accepted Answer

A)   The possibility that a material misstatement will occur within the reporting company's accounting information system
B)   The possibility that a material misstatement that has occurred will not be detected on a timely basis by the company's control system
C)   The possibility that a material misstatement that has occurred will not be caught be the independent auditor's testing
D)   The possibility that a material misstatement will occur in the financial statements

Question 6

The Xerox case deals with accounting for multiple deliverables. Explain what this means in the context of the Xerox fraud.

Accepted Answer

The challenge of transactions with multi...

Question 7

The Monsanto case centered around the:

Accepted Answer

A)   Acceleration of revenue due to channel stuffing arrangements
B)   Use of cookie jar reserves to manage earnings
C)   Improperly accounting for rebates
D)   Use of non-GAAP EPS

Question 8

In the Statement of Financial Accounting Concepts (SFAC)  No. 8. SFAC No. 8 the position about materiality is that:

Accepted Answer

A)   It should always be determined only through qualitative evaluations
B)   It should always be determined through quantitative evaluations
C)   It should always be determined by considering whether the amount affects past financial statements
D)   It should be determined by how the magnitude of the item would be viewed by a reasonable person

Question 9

Explain what is meant by "quality of earnings" including links to earnings management and audit committee responsibilities in evaluating the quality of earnings?

Accepted Answer

The terms "quality of earnings" and "ear...

Question 10

Which of the following authors(s)  focus(es)  on "management's intent to deceive the stakeholders by using accounting devices to positively influence reported earnings?"

Accepted Answer

A)   Dechow and Skinner
B)   Healy and Wahlen
C)   Schipper
D)   Thomas E. McKee

Question 11

An unusual aspect of the Green Mountain case is it included:

Accepted Answer

A)   Conference calls that provided earnings guidance to shareholders and analysts were used to mask a financial fraud
B)   Desire to meet or beat analysts' earnings expectations led to manipulation of receivables balances
C)   Company violated the Sarbanes-Oxley Act
D)   PricewaterhouseCoopers knew about inflated inventory values

Exam 7: Earnings Management

Inherent risk refers to:

Correct Answer
verified

Which of the following authors(s) focus(es) on "management's intent to deceive the stakeholders by using accounting devices to positively influence reported earnings?"

Correct Answer
verified

Needles suggests that making judgments about what earnings management is becomes difficult because:

Correct Answer
verified

In the Statement of Financial Accounting Concepts (SFAC) No. 8. SFAC No. 8 the position about materiality is that:

Correct Answer
verified

Explain what is meant by "quality of earnings" including links to earnings management and audit committee responsibilities in evaluating the quality of earnings?

Correct Answer
verified
The terms "quality of earnings" and "ear...
View Answer

The Xerox case deals with accounting for multiple deliverables. Explain what this means in the context of the Xerox fraud.

Correct Answer
verified
The challenge of transactions with multi...
View Answer

An unusual aspect of the Green Mountain case is it included:

Correct Answer
verified

The best way to characterize the role of Sherron Watkins in the downfall of Enron is:

Correct Answer
verified

Financial shenanigans involving recording revenue too soon includes all of the following except:

Correct Answer
verified

The Monsanto case centered around the:

Correct Answer
verified

Which of the following was not an accounting issue in the Sunbeam case?

Correct Answer
verified

Exam 7: Earnings Management

Inherent risk refers to:

Correct AnswerverifiedShow Answer

Which of the following authors(s) focus(es) on "management's intent to deceive the stakeholders by using accounting devices to positively influence reported earnings?"

Correct AnswerverifiedShow Answer

Needles suggests that making judgments about what earnings management is becomes difficult because:

Correct AnswerverifiedShow Answer

In the Statement of Financial Accounting Concepts (SFAC) No. 8. SFAC No. 8 the position about materiality is that:

Correct AnswerverifiedShow Answer

Explain what is meant by "quality of earnings" including links to earnings management and audit committee responsibilities in evaluating the quality of earnings?

Correct AnswerverifiedThe terms "quality of earnings" and "ear...View AnswerShow Answer

The Xerox case deals with accounting for multiple deliverables. Explain what this means in the context of the Xerox fraud.

Correct AnswerverifiedThe challenge of transactions with multi...View AnswerShow Answer

An unusual aspect of the Green Mountain case is it included:

Correct AnswerverifiedShow Answer

The best way to characterize the role of Sherron Watkins in the downfall of Enron is:

Correct AnswerverifiedShow Answer

Financial shenanigans involving recording revenue too soon includes all of the following except:

Correct AnswerverifiedShow Answer

The Monsanto case centered around the:

Correct AnswerverifiedShow Answer

Which of the following was not an accounting issue in the Sunbeam case?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The terms "quality of earnings" and "ear...
View Answer

Correct Answer
verified
The challenge of transactions with multi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified