Exam (elaborations)
WGU C254 Exam Review questions with verified answers
- Institution
- Western Governors University
WGU C254 Exam Review questions with verified answers
[Show more]
Content preview
WGU C254 Exam Review questions with verifiedanswers
Ans✓✓✓ Enron involved "sham transactions" between the company and related
parties, which materially over-valued securities listed as current assets on the
Balance Sheet.
Because Enron valued it securities at "Mark to Market," it showed increasing
earnings as oil prices increased. However, when oil prices decreased, the value of
many of its complicated derivatives-based securities decreased substantially.
To avoid having to report these losses, Enron shifted the securities to SPEs. In
many companies, securities that are not widely traded are valued by complex
computer models. In these situations, it is often difficult for auditors to know
whether of not the securities are properly valued.
"Creating an expectation of punishment" is most closely associated with what
element of the fraud triangle? Ans✓✓✓ Reducing perceived fraud opportunities
Fraud opportunities include the ability to commit and conceal fraud and, if
caught, not be punished.
Fraud perpetrators are usually first-time offenders, and knowing that dishonest
actions will be punished takes away their "perceived opportunities" to commit
and conceal fraud.
According to the SEC, what is "one of the largest and most brazen (shameless)
corporate financial frauds in history"? Ans✓✓✓ Parmalat
,Employed various tactics in Europe to grossly UNDERSTATE its liabilities (larger
than the bankruptcies of both Enron and WorldCom when compared to "gross
domestic product")
Accounting or Documentary symptoms related to Understated Accounts Payable
Ans✓✓✓ 1. Received invoices with no liability recorded
2. Large purchases recorded at the beginning of a period
3. Large payments made in subsequent periods that are backdated to the current
period
4. The presence of receiving reports with no recorded liability
5. Amounts listed on vendor statements with no recorded liability\
6. Errors in cutoff tests
Analytical symptom for "understatement of interest"? Ans✓✓✓ Analytical
symptom: determining the notes payable balance is too low (unusual).
Analytical symptoms related to recorded unearned revenues as "earned
revenues" Ans✓✓✓ 1. Unearned revenue (liability) account balances that appear
too low.
2. Revenue accounts that appear too high.
To determine if revenues are being recognized before they are earned, examining
(1) terms of contracts, (2) sales agreements, and (3) other revenue-related
documentation.
, Analytical symptoms related to Understated Accounts Payable Ans✓✓✓ 1.
Accounts payable balances that appear too low
2. Purchase or COGS numbers that appear too low
3. Purchase returns or purchase discounts that appear too high
Analytical symptoms related to Understated Accrued Liabilities (e.g., payroll,
payroll tax, rent, interest) Ans✓✓✓ Payroll, payroll tax, rent interest, utility, or
other accrued liabilities that appear too low.
Determining whether these balances are "too low" is made by:
1. comparing the recorded amounts to balances in past periods
2. comparing relationships with other accounts
3. comparisons with balances in other, related companies
Analytical symptoms related to Understating Liabilities (e.g., Notes Payable,
Mortgages Payable) Ans✓✓✓ Unrecorded notes and mortgages payable include:
(1) unreasonable relationships between interest expense and recorded liabilities,
(2) significant decreases in recorded debt,
(3) significant purchases of assets with no recorded debt, and
(4) recorded amounts of notes payable, mortgages payable, lease liabilities,
pension liabilities, and other debts that appear too low.
Another analytical symptom is the "existence of related parties," like in the Enron
case
Contingent liabilities Ans✓✓✓ Probable:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller cracker. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $17.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
69484 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 15 years now
Recently viewed by you
Exam (elaborations) ·
Nursing-354 Quiz 1 questions with Complete solutions
Package deal ·
Samenvatting Intellectuele Eigendomsrecht UvT 2024
Exam (elaborations) ·
AINS 101 Exam Prep with complete Solutions | Latest 2024/2025
Exam (elaborations) ·
A level English Literature Poetry Coursework (grade a)
Summary ·
samenvatting gerechtelijk recht (lessen EN boek samen)
Class notes ·
Voortplanting en verloskunde van de grote huisdieren
Summary ·
Samenvatting hoofdstuk 5 Atoombouw (Chemistry McMurry)
Summary ·
Resumen GFGS Agencias de viajes y gestión de eventos
