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53 Cards in this Set
- Front
- Back
The balance sheet is know as......? |
Statement of Financial position |
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When is the balance sheet snapshot |
Last day of the accounting period |
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What is the accounting equation |
Assets=liabilities + equity |
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How are assets listed on the balance sheet |
By how soon they are expected to be converted to cash. |
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How are liabilities presented on the balance sheet |
In order of maturity. Obligations that are expected to be paid within 1 year are listed first. |
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What are liabilities that are not due for more than 1 year called |
Long term liabilities |
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When does capital stock increase |
When owners of a company invest in it through purchase of capital stock |
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When does retained earnings increase |
when the company has earnings |
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When do retained earnings decrease |
When the company has losses or when dividends are distributed |
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What time snapshot does the income statement show |
How much profit or loss a company earned during a period of time such as quarter or a year |
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When does the balance of the income statement become zero and what happens to the income or loss |
At the end of the year, the results are added or subtracted from retained earnings on the balance sheet. |
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How is the amount left over from sales to pay the company s operating expenses calculated |
The difference between net sales and COGs known as gross profit |
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What happens to income that is not distributed |
It is transferred to the retained earnings. |
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Which statement is used to determine a company's true financial performance |
The statement of cash flows |
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What are the three sections of the cash flows statement |
Investing activities operating activities and financing activities |
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What is the difference between the cash flows direct method and the cash flows indirect method |
The direct method list the sources of operating cash flows and the use of operating cash flows the indirect method reconciles net income per the income statement Annette cash from operating activities |
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What is the most common use of fraudulent statements |
To bolster and organizations appearance success in the eyes of potential and current investors |
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What is the difference between first-party cyber coverage and third-party |
first-party coverage includes coverage against losses such as Data destruction extortion theft and hacking third party coverage provides coverage when a company sued 4 problems caused by technology product errors and omissions |
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What are the three types of occupational fraud |
Corruption asset misappropriation and financial statement fraud |
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What is the most common of all occupational frauds |
Asset misappropriation |
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Name 3 asset misappropriation schemes |
cash receipts, fraudulent disbursements, and theft of inventory and other non cash assets. |
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name 2 categories of cash receipt schemes |
skimming and larceny |
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define cash larceny |
theft of money that has already appeared on company's books |
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Define Skimming |
theft of money that has not been accounted for |
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Define understated sales |
Transactions posted to the books but for a lower amount than what was collected. |
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What is a false discount skimming scheme |
when full payment for an item is accepted but the transaction is recorded as if the customer had been given a discount |
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How do skimed receivables appear on the books |
appears as an absence payment and therefore results in a delinquent account |
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Define Lapping: Robbing peter to pay paul |
Crediting of one acct. through the abstraction of money from another acct. |
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Name a way that fraudsters attempt to conceal a skimmed payment as it relates to statements |
intercept the account statement by changing address or altering the statements |
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How can skimming be concealed as it relates to expense accounts and what is the result |
instead of debiting cash acct the fraudster could choose to debit an expense account. Result: company's books in balance, receivable account is credited so acct is not delinquent but cash is never recorded. |
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name/ describe the problem with skimming schemes as it relates to inventory |
it will always leave inventory shortage and a rise in COGS. |
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in a short-term skimming scheme what happens to the payment(s) |
payments are delayed in posting. Payment is posted in an interest bearing account or a short term security. |
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explain why routine acct. reconciliation is not likely to prevent a skimming |
because skimming is an off book fraud |
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What is cash larceny |
the intentional taking of an employers cash |
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explain an unsophisticated way to avoid detection when stealing currency? |
Steal the currency in very small amounts. |
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explain reversing transactions and what is the result |
Processing false voids or refunds. Results: causes register log to reconcile to the amount of cash on hand after theft. |
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explain register manipulation; what is the purpose |
manually alter the register log the purpose is to force a balance between cash on hand and actual cash received. |
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explain alterting cash counts |
employee records the wrong amount after cash is totaled. |
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Explain lapping in cash larceny |
employee steals the deposit form day one and replaces it with day two's deposit. |
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explain deposits in tranist |
money that has been recorded in the company cash but has not cleared the bank |
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why are cash larceny schemes harder to get away with |
because it leaves and audit trail |
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name four ways to prevent cash larceny |
1. separation of duties 2. assignment rotation and mandatory vacations 3. surprise cash counts 4. physical security of cash |
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explain a fraudulent disbursement scheme |
making a distribution of company funds for dishonest purpose |
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how does register disbursment schemes differ from skimming and cash larceny |
The removal of the cash from the register is recorded. |
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what are the 2 register disbursement schemes |
false refunds and false voids |
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Define retainage |
a certain amount withheld from each draw request by the contractor. The amount is not paid until the contract has been finished. |
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define a direct-action virus |
a virus that loads itself onto the target systems memory, infects other files and then unloads. |
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What is a nonperforming loan |
a loan that is in default or close to being in default |
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what are the 3 common methods for concealing liabilities and expenses
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1. impropertly capitalizing costs rather then expensing them 2. failing to discloe warranty cost and product-return liailities 3. omitting liabilities or expenses. |
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Define an altered payee scheme |
The altered payee scheme is a type of check tampering fraud in which an employee intercepts a company check intended for a third party and alters the payee |
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Define double-pledging collateral |
In a double-pledging collateral scheme, borrowers pledge the same collateral with different lenders before liens are recorded and without telling the lenders. |
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What are 2 basic preventive measures for payroll fraud. |
There are two basic preventive measures for payroll-related fraud: segregation of duties and periodic payroll review and analysis. |
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Define rent a patient schemes |
paying individuals to undergo unnecessary medical procedures that are then billed to the patient’s insurer or health care program. |