Sally Lauren Is the External Auditor for Modus Industries, a Public

question 4

Multiple Choice

Sally Lauren is the external auditor for Modus Industries, a public company that manufactures disk drives. As she analyzes the numbers, she finds that the quick ratio, which has typically remained consistent, increased from 1.7 to 2.3 over the previous year. What type of financial statement fraud scheme could be occurring?

• A) Inflated inventory
• B) Omitted expenses
• C) Fictitious accounts receivable
• D) None of the above

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Definitions:

Alessandro Volta

An Italian physicist known for inventing the battery in the 1800s, leading to the development of the first source of continuous electrical current.

Electricity

A form of energy resulting from the existence of charged particles, such as electrons or protons, either statically as an accumulation of charge or dynamically as a current.

Voltaic Cell

A device that converts chemical energy into electric energy.

Acid

A substance that donates hydrogen ions (H+) to solutions and can accept a pair of valence electrons to form a bond.