PM 1208 Chapter 11

Q1. Which of the following is NOT a common symptom of fraud?

• A) Unusual transactions

• B) Strong internal controls

• C) Inconsistent financial records

• D) Unexplained wealth or lifestyle changes

Q2. A sudden and significant increase in an employee’s wealth, without any reasonable source of income, is a symptom of fraud known as:

• A) Financial discrepancy

• B) Unusual transaction

• C) Unexplained wealth or lifestyle changes

• D) Accounting manipulation

Q3. An organization that lacks internal control mechanisms is more prone to:

• A) Fraudulent activities

• B) Cost efficiency

• C) Increased revenues

• D) Higher profit margins

Q4. If a procurement officer awards contracts to a vendor owned by a close relative without disclosure, this is an example of:

• A) Financial statement fraud

• B) Payroll fraud

• C) Tax evasion

• D) Conflict of interest

Q5. The purpose of a "Should Cost" analysis is to:

• A) Overstate product costs to increase prices

• B) Estimate the fair and reasonable cost of a product or service

• C) Determine the selling price of competitors’ products

• D) Reduce only labor costs in an organization

Q6. A company estimates the cost of a machine based on materials, labor, overhead, and reasonable profit margins. This process is called:

• A) Should Cost Analysis

• B) Price gouging

• C) Demand forecasting

• D) Cost-plus pricing

Q7. Cost variance is calculated as:

• A) Actual Cost - Planned Cost

• B) Planned Cost × Actual Cost

• C) Actual Cost ÷ Planned Cost

• D) Planned Cost - Actual Cost

Q8. If the actual cost of a project is lower than the planned cost, the variance is:

• A) Zero

• B) Positive

• C) Negative

• D) Undefined

Q9. A negative cost variance indicates that:

• A) The project is over budget

• B) The project is under budget

• C) The project is on budget

• D) There is no variation in cost

Q10. Which of the following could cause a variation between actual and planned costs?

• A) Market price changes

• B) Scope changes

• C) Operational inefficiencies

• D) All of the above