bush ACCT 4480 Spring 2017 Exam 3 Study Guide .docx

bush ACCT 4480 Spring 2017 Exam 3 Study Guide .docx -...

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Accounting 4480 (Orchard), Spring 2017 Clayton State University Exam 3 Study Guide, Version 2 The exam will consist of 33 multiple-choice questions. You are responsible for all of the material in Chapters 6, 7, 11 and 12. Some questions may cover material found in the book that we haven’t covered in class, and vice versa, but the vast majority of questions will cover material emphasized in both the textbook and in class. There will be approximately 8 questions from each chapter. The only updates from Version 1 of this guide is the page numbers (and in some cases, the question numbers) of the Gleim questions. Revisions are in bold blue. Here are the major topics you should be ready to handle on Exam 3. Particularly important items are in bold. Chapter 6 – Employee Fraud and the Audit of Cash Know what the following terms mean, and the distinctions between them: Fraud, Employee Fraud, Embezzlement, Errors, and Direct-Effect Illegal Acts. Know the three phases of employee fraud (pg. 223). Fraud: act of knowingly making material misstatements of fact with the intent of inducing someone to believe the falsehood and act upon it and, thus, suffer a loss or damage Employee Fraud: use of fraudulent means to take money or property from an employer; Three phases are: 1) the fraudulent act 2) the conversion of the money or property to the fraudster’s use 3) the cover up. Embezzlement: type of fraud involving employees or nonemployees wrongfully taking money or property entrusted to their care, custody, and/or control often accompanied by false accounting entries and other forms of lying and cover-up. Errors: the unintentional misstatements or omissions of amounts or disclosures in financial statements. Direct-Effect Illegal Acts: violations of the law or government regulations by a company or its mgmt or employees that produce direct and material effects on dollar amounts in financial statements. Know the “Characteristics of Fraudsters” (pg. 224), except that you don’t need to know the age or employment tenure of fraudsters. Some characteristics/behavior of fraudsters include: drink too much; can’t relax; take drugs; become irritable easily; get defensive, argumentative; sweat excessively. White Collar criminals have: education beyond high school; married; socially conforming; has no arrest record; usually acts alone . Know the Fraud Triangle (pg. 226). Know what the various motivations for fraud are (pg. 226-227). The Fraud Triangle consists of motivation, opportunity, and rationalization. Motivation: is some type of pressure or reasoning by a person that is believed to be unshareable with friends and confidants. Economic motivation is the actual or perceived need for money. Psychotic motivation is relatively rare and is associated with the habitual criminal who steals simply for the sake of it. Egocentric motivation drives people to steal to achieve more personal prestige and gain. Ideological motivation are held by people who think their cause is morally superior and they are justified in making someone else a victim.
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