100%(3)3 out of 3 people found this document helpful
This preview shows page 1 - 3 out of 5 pages.
Running head: SHORT ANSWER PROBLEM SET 1Module 04 Written Assignment – Short Answer Problem SetJeremy WheelerRasmussen CollegeAuthor NoteThis paper is being submitted on December 03, 2017, for Tiffany Krogman’s A276/ACG2680 Section 02 Financial Investigation course.
SHORT ANSWER PROBLEM SET2Module 04 Written Assignment – Short Answer Problem SetOverstatement of Reserve & GoodwillWhen a company is acquired, the accumulated depreciation is added to the acquiring company's balance sheet and offset by the acquiring company's reserves. If the reserves are overstated, something in the acquiring company's asset accounts needs to be increased in order tooffset the additional reserves. Of the available asset accounts, only the Goodwill account, an intangible asset, can be modified without some sort of required accountability.Gross Margin Increase“Sudden, significant increases in gross margin as a percentage of sales are indications of possible overstatement of inventory and understatement of COGS.” (Jackson, 2015, p.179) It is not a guarantee of fraud, however, because there are some logical reasons for the increase. Those reasons should be noted in the Management Discussion and Analysis section of the annualreport so that the increase is not suspect. (Jackson, 2015, p.179) Lifestyle Changes