1. An example of fraud would be:
Issuing a purchase order without first securing bids.
Buying raw materials from an affiliated company.
Knowingly classifying a material noncurrent receivable as a current receivable.
Forgetting to accrue salaries and wages payable.
2. An example of an error would be:
Purchasing inventory from a related party.
Counting an inventory item twice when taking a physical inventory.
Holding back invoices so that accounts payable are understated.
Receiving kickbacks in exchange for issuing a purchase order to a vender.
3. The acid-test ratio is also known as the:
Current ratio.
Debt to equity ratio.
Times interest earned ratio.
Quick ratio.
4. The quick ratio is:
The liquidity ratio divided by the equity ratio.
Current assets minus inventory divided by current liabilities minus accounts payable.
Current assets minus inventory and prepaid items divided by current liabilities.
Cash divided by accounts payable.
5. When a company accrues federal income taxes at the end of the accounting period:
Its acid-test ratio increases.
Its current ratio increases.
Its debt to equity ratio decreases.
Its debt to equity ratio increases.