CFE Part1 Financial Transactions & Fraud Schemes

Which of the following appears on the balance sheet?

Current Assets

Vertical analysis

analyzing the relationships among the items on an income statement, balance sheet, or statement of cash flows during a specific accounting period by expressing components as percentages of a specified base value

Horizontal analysis

analyzing the percentage change in individual line items on a financial statement from one accounting period to the next.

Ratio analysis

measuring the relationship between any two different financial statement amounts.

Asset Turnover Ratio

net sales / avg total assets

Quick ratio

compares quick assets to current liabilities =total cash securities & receivables / current liabilities

Increasing (credit) revenue for fake sales is balanced by debit to

Accounts recievable

debt-to-equity ratio

total liabilites / total equity

current ratio

current assets / current liablilites

Timing difference example

Recording revenue in Year 1 when the payment is received, even though the service won’t be performed until Year 2

The asset turnover ratio

net sales / avg total assets ; used to determine the efficiency with which asset resources are used by the entity