1.

Question 1
Which of the following variables are included in the Modified Jones model? (check all that apply)
1 / 1 point
Accruals
Correct
Cash Revenue Growth
Correct
Cash dividends
EBITDA
Kittens and puppies

2.
Question 2
Below is selected data for Swedish Vallhund AB. Calculate discretionary accruals for Swedish Vallhund
using this data.

Net Income (NI) Cash from Operations (CFO) Prior TA Normal Accruals
3000 2000 10000 -0.160
0 / 1 point
0.100
0.460
0.260orrect
1000.160. incorrect
-0.060 Incorrect
Incorrect

3.
Question 3
Which of the following companies is the most likely suspect for managing earnings lower This Year?

Company Year Normal Accruals Discretionary Accruals

Spaniel Craig Co Two Years Ago -0.052 0.024
Spaniel Craig Co Last Year -0.068 -0.014
Spaniel Craig Co This Year -0.238 0.139
Sean Collie Inc Two Years Ago -0.082 -0.013
Sean Collie Inc Last Year -0.020 -0.053
Sean Collie Inc This Year 0.080 -0.143
Pinscher Brosnan Ltd Two Years Ago -0.038 0.310
Pinscher Brosnan Ltd Last Year -0.049 0.188
Pinscher Brosnan Ltd This Year -0.044 0.246
0 / 1 point
Pinscher Brosnan Ltd
Both Sean Collie Inc and Pinscher Brosnan Ltd incorrect in increace
None of the companies Incorrect
Spaniel Craig Co
Sean Collie Inc orrect

4.
Question 4
Which of the following actions could affect a company’s amount of discretionary expenditures? (check
all that apply)
0 / 1 point
Delay a planned R&D program for the next period
Correct
Increase the expected percentage of sales this period that will have future warranty claims
This should not be selected
Change depreciation assumptions this period
This should not be selected
Spend more on advertising than budgeted in the current period
Correct
Increase sales growth during the current period
This should not be selected

5.
Question 5
Below is selected data for Siberian Husky ZAO. Calculate discretionary R&D for Siberian Husky using
this data.

Year Total Assets R&D Normal R&D

Last Year 10000 900 -0.006
This Year 15000 1000 0.060
0 / 1 point
99.940
-0.050 orrect

0.070
-0.053. ncorrect
0.007
Incorrect

6.
Question 6
Which of the following companies is the most likely suspect for managing earnings lower This Year for
“big bath” motives?

Discretionary Distance YoYR&D YoYR&D YoYR&D YoY

Company Year
R&D (R&D) Q1 Q2 Q3 Q4
Chihuahua
Last
Eccleston 0.052 0.027 61.1% 68.8% 10.3% 30.5
Year
Co
 Chihuahua
This
Eccleston -0.030 0.367 31.1% 30.2% 14.8% 6.8%
Year
Co
Tom Boxer Last
0.001 0.756 13.0% 2.0% 1.1% 11.1
Inc Year
Tom Boxer This
0.082 0.935 40.3% 46.1% 58.4% 73.8
Inc Year
David Last
-0.190 0.294 18.4% 38.4% 44.5% 31.7
Terrier Ltd Year
David This
0.180 -0.634 16.3% 33.9% 52.8% 35.7
Terrier Ltd Year
Mutt Smith Last
-0.019 -0.033 0.7% 3.5% 13.1% 12.7
Corp Year
Mutt Smith This
-0.054 -0.007 11.8% 8.3% 2.4% 1.4%
Corp Year
0 / 1 point
Everyone except Mutt Smith Corp incorrect
David Terrier Ltd
Tom Boxer Inc. incorrect
Chihuahua Eccleston Co incorrect
Mutt Smith Corp
Incorrect

7.
Question 7
For which of the following ratios would an increase in the value of the ratio lead to an increase inthe
Beneish M-score? (check all that apply)
0 / 1 point
SG&A Index (SGAI)
This should not be selected. In other
Asset Quality Index (AQI)
Correct
Total Accruals to Total Assets (TATA)
Correct
Leverage Index (LVGI)
This should not be selected. In other
Sales Growth Index (SGI)
Correct

8.
Question 8
Which of the following companies are potential manipulators according to the Beneish M-Score?
(check all that apply)

Company M-Score
 Arcanine Inc -0.51
Growlithe Ltd -2.63
Houndoom Co -1.42
Lillipup Corp -3.19
Smeargle Pty -1.98
0 / 1 point
Houndoom Co
Correct
Smeargle Pty
This should not be selected
Lillipup Corp
This should not be selected
Growlithe Ltd
This should not be selected
Arcanine Inc
Correct

9.
Question 9
Who first discovered Benford’s Law?
1 / 1 point
Frank Benford
Dan Amiram
Zahn Bozanic
Ethan Rouen
Simon Newcomb orrect
Correct

10.
Question 10
Below is data from five companies’ financial statements. Which of the following companies are
potential manipulators according to Benford’s Law? (check all that apply) (Hint: get a calculator so you
can do square roots!)

Company Number of Leading Digits Kolmogorov-Smirnov statistic

Briard Childress Ltd 230 9.9%
Bulldog Grant Corp 145 6.2%
Dachshund Green Inc 91 13.2%
Lhasa Apso Frazier Co 124 13.2%
Mi-Ki Tice Cie 145 36.2%
0 / 1 point
Briard Childress Ltd
Correct
Mi-Ki Tice Cie
Correct
Bulldog Grant Corp
This should not be selected
Dachshund Green Inc
This should not be selected
Lhasa Apso Frazier Co
Correct