Webclass 29 Quiz: TOP 5 Financial Accounting Fraud

Q1. According to Claire, how was the Worldcom scandal uncovered?

By internal audit reviewing journal entries

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By top management resigning

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Q2. The first time that the auditors present the journal entries to management, does management admit straight away that there is a problem?

No, they explained it as normal "prepaid capacity"

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Yes, they admitted straight away to the auditors that there was a problem

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Q3. When we want to reduce Loss (P&L), we should post it on the debit or credit side of the journal entry?

Credit

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Debit

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Q4. Worldcom increased their retained earnings by increasing the amount of revenue that should be posted

False

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True

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Q5. What was a motivating factor for the Worldcom management to “cook the books”?

Expenses versus revenue ratio was poor

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Stock price can be influenced by poor ratios such as expenses versus revenue

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So that management could misappropriate inventory

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Q6. Assets increase on debit and liabilities increase on credit

True

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False

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Q7. Which ratios does Claire mention as being important?

Current receivables/ current liabilities

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Accounts receivable/ net sales

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Net sales/ cost of sales

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Fixed assets/ cost

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Q8. How might we increase Accounts Receivable?

Book deferred revenue early

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Book customer invoices early

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Decrease the amount of cost booked in the period

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Q9. How might we reduce Current Liabilities?

Post supplier invoices late

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Credit-debit refresh on ageing customer accounts

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Stock OUT-IN refresh on inventory

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Net-off accounts payable to a suspense account

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Book loss on debit and profit on credit

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Q10. Select the steps that Claire follows when using an example USGAAP COA to identify strange accounting schemes

Make a cartesian product of basic US GAAP COA, in order to get all combinations of accounts with all accounts (which would represent all combinations of debit and credit within an accounting scheme)

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Mapping of the US GAAP COA to the local or group COA

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Flag the combinations of debit and credit accounts as those that would be considered to be strange accounting schemes

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Filter your local general ledger on journal entries that have an accounting scheme that is the same as those flagged as strange (taking the account on debit with the highest value and the account on credit with the highest value)

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Take a sample of journal entries at random from the entire population of journal entries

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Q11. What other journal entry data analytics are important, other than looking at the journal entry accounting schemes?

Posting in the wrong period

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Looking at unusual bank transactions/ matching the bank transactions to the bank statements

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High values pre-post closing

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Trends in manual journal entries: which accounting schemes that are unusual, who is entering them, when they are entered…

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Journal entries entered on the 1st of the month

Correct Incorrect Correct answer

Webclass 29 Quiz: TOP 5 Financial Accounting Fraud

Webclass 29 Quiz: TOP 5 Financial Accounting Fraud

admin June 9, 2026

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