Diff: 2
LO: 1-4
AACSB: Reflective Thinking
32) Which of the following is a primary responsibility of a testifying expert?
A) to render an opinion that will assist the judge in understanding the evidence
B) to render an opinion that will assist the attorney in advocating for the client
C) to render an opinion that will assist the attorney in understanding the evidence
D) to render an opinion that will assist the trier of fact in reaching a judgment
Answer: A
Explanation: A) One of the primary responsibilities of a testifying expert is to render an opinion that will assist the trier of fact (judge or jury) in understanding the evidence. To that end, an expert's opinion must be stated in a legally sufficient manner and must be based on reliable facts, data, and methodology.
Diff: 2
LO: 1-4
AACSB: Analytical Thinking
33) In 2008, the sales of the Trident Inc. went up by 10% and its stock prices increased by 20%. In 2010, the sales of the Trident Inc. went up by 15% and its stock prices increased by 30%. You conclude that in 2013, since the sales increased by 5%, the stock price will increase by 10%. Which type of reasoning are you using?
A) deductive reasoning
B) intuitive reasoning
C) suggestive reasoning
D) inductive reasoning
Answer: D
Explanation: D) Inductive reasoning draws conclusions from patterns. The inductive reasoning process flows from a set of specific observations, facts, or data to a working hypothesis and then a general conclusion (that is, bottom up). Here, the pattern in increase in sale along with corresponding increase in stock prices is forming the base for conclusion.
Diff: 3
LO: 1-4
AACSB: Analytical Thinking
34) Which of the following represents the relative importance of the three components of oral communication?
A) body language - 55%, voice tone - 35%, and words - 10%
B) body language - 30%, voice tone - 50%, and words - 20%
C) body language - 45%, voice tone - 25%, and words - 30%
D) body language - 20%, voice tone - 10%, and words - 70%
Answer: A
Explanation: A) The relative importance of the three components of oral communication is: (1) body language, which accounts for roughly 55% of the message; (2) voice tone, which accounts for roughly 35% of the message; and (3) words, which account for only 10% of the message.
Diff: 2
LO: 1-4
AACSB: Analytical Thinking
35) Which of the following organizations provide forensic accounting certifications?
A) Institute of Certified Cost & Management Accountants
B) Institute of Management Accountants
C) American Institute of Certified Public Accountants
D) Chartered Financial Analyst Institute
Answer: C
Explanation: C) American Institute of Certified Public Accountants provides Accredited in Business Valuation and Certified in Financial Forensics certifications.
Diff: 1
LO: 1-5
AACSB: Analytical Thinking
1.3 Short-Answer Questions
1) Define forensic accounting.
Answer: Forensic accounting is a discipline that is focused on: (1) the prevention, detection, and investigation of both occupational fraud and financial statement fraud; and (2) the rendering of other litigation-support services.
Diff: 1
LO: 1-1
AACSB: Analytical Thinking
2) Apart from fraud-related investigations, what other investigations are forensic accountants commonly engaged in?
Answer: In addition to the fraud-related investigations previously discussed, forensic accountants are commonly engaged to conduct investigations unrelated to fraud. Examples of such investigations include whistleblower complaints and financial viability concerns. A whistleblower complaint is a disclosure by a person of wrongdoing or misconduct within the organization. Usually, a forensic accountant is utilized when the allegation is considered serious or when the appearance of independence is important. Financial viability investigations include short- or long-term assessments of financial and managerial sustainability or the reasonableness of insurance claims.