Multiple Choice
1. One way that criminal law differs from civil law is that it:
a. provides remedies for violations of private rights.
b. must yield a unanimous verdict.
c. can have a jury of fewer than 12 persons.
d. allows for various claims in one action.
ANSWER: b
RATIONALE: a. Incorrect. This is a characteristic of civil law; criminal law deals with crimes against
the public.
b. Correct. Criminal trials must result in a unanimous verdict.
c. Incorrect. This is a characteristic of civil law; criminal trial juries must have 12
persons.
d. Incorrect. This is a characteristic of civil law; criminal law permits only one claim at a
time.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
2. Which of the following is NOT an element of a Ponzi scheme?
a. Gaining other's confidence.
b. Promising abnormally high returns.
c. Collected money is invested.
d. Investment principle is partially used to make payments to previous investors.
ANSWER: c
RATIONALE: a. Incorrect. This is one of the most important elements of the “con.”
b. Incorrect. This is how fraudsters lure in investors.
c. Correct. This is very unlikely.
d. Incorrect. The original principle is often used to make interest payments.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AMPage 1Chapter 01

3. The following are all elements of Title 26, U.S. Code Section 7201 EXCEPT:
a. not reporting bribe income may be grounds for being charged with tax evasion.
b. filing income tax that excludes income from fraud may be considered an improper tax filing.
c. bribes paid may be deducted as business expenses.
d. failure to report income from fraud may be grounds for being charged with tax evasion.
ANSWER: c
RATIONALE: a. Incorrect. Not reporting bribe income may be grounds for being charged with tax
evasion.
b. Incorrect. Filing income tax that excludes income from fraud may be considered an
improper tax filing.
c. Correct. Bribes cannot be deducted as legitimate business expenses.
d. Incorrect. Failure to report income from fraud or bribes may be prosecuted as tax
evasion.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
4. Which one of the following is NOT a characteristic of a criminal proceeding?
a. Deals with offenses against society.
b. Consequences include restitution and damage payments.
c. Jury of 12 individuals.
d. Only one claim may be heard at a time.
ANSWER: b
RATIONALE: a. Incorrect. A crime is considered an offense against society.
b. Correct. In a criminal proceeding, the consequences are jail and/or fines.
c. Incorrect. A criminal jury consists of 12 jurors.
d. Incorrect. Only one claim is heard at a time, whereas in a civil case many claims may
be joined into one action.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AMPage 2Chapter 01

5. Management fraud is often referred to as:
a. stockholder fraud.
b. financial statement fraud.
c. employee fraud.
d. investment fraud.
ANSWER: b
RATIONALE: a. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
b. Correct. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
c. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
d. Incorrect. In its most common form, management fraud involves top management's
deceptive manipulation of financial statements.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
6. What is required to prove fraud, as opposed to negligence?
a. Gross error
b. Intent
c. Preponderance of the evidence
d. Confession from the perpetrator
ANSWER: b
RATIONALE: a. Incorrect. Gross error is not sufficient evidence to prove fraud.
b. Correct. To succeed in a criminal or civil prosecution, it is usually necessary to show
that the perpetrator acted with intent to defraud the victim.
c. Incorrect. This is what is proven in a civil case.
d. Incorrect. Confession is not required to prove fraud. In fact, many perpetrators never
admit their guilt.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.5
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AMPage 3Chapter 01

7. Which of the following is the most common type of occupational fraud?
a. Management fraud
b. Mail fraud
c. Investment fraud
d. Employee embezzlement
ANSWER: d
RATIONALE: a. Incorrect. Employee embezzlement is the most common type of occupational fraud.
b. Incorrect. Employee embezzlement is the most common type of occupational fraud.
c. Incorrect. Employee embezzlement is the most common type of occupational fraud.
d. Correct. Employee embezzlement is the most common type of occupational fraud.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AM
8. Which of the following is NOT a characteristic of management fraud?
a. Top management deception
b. Manipulation of financial statements
c. Kickbacks or bribes
d. Pressure to earn year-end bonuses
ANSWER: c
RATIONALE: a. Incorrect. Management fraud often involves top management's deceptive
manipulation. Management fraud is when the top management deceives stockholders.
b. Incorrect. Management often uses the manipulation of financial statements to commit
fraud. This is one of the easiest ways to commit a large fraud.
c. Correct. These are examples of employee embezzlement. Management fraud usually
deals with financial statement manipulation.
d. Incorrect. Many managers commit fraud to receive large bonuses that are dependent
upon financial performance.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: FRAU.ALBR.19.1.3
DATE CREATED: 3/10/2018 9:22 PM
DATE MODIFIED: 3/20/2018 7:58 AMPage 4Chapter 01

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Test Bank for Fraud Examination, 6th Edition

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