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Frequently Asked Questions

ACFE CFE-Financial-Transactions-and-Fraud-Schemes Sample Question Answers

Question # 1

Which of the following is true for Red flags associated with fictitious revenues?

A. Slow growth or usual profitability, when not compared to other companies in the sameindustry. 
B. Usual growth in the number of days purchase in receivables 
C. A significant volume of sales to entries whose substance and ownership is not known. 
D. A usual surge in purchase by a majority of units within a company, or of purchaserecorded by corporate headquarters. 

Question # 2

Which of the following is the amount of money that would be realized upon the sale of theasset at some point in the future, less the costs associated with owing, operating andselling it?

A. Net realizable value 
B. Going concern 
C. Cost 
D. Fair value 

Question # 3

Accounting records are designed to be kept on subjective rather than objective evidence.

A. True 
B. False 

Question # 4

Accounting records are designed to be kept on subjective rather than objective evidence.

A. True 
B. False 

Question # 5

What can make it easy for an employee to skim sales or receivables?

A. Revenue sources and recording procedures 
B. Poor collection and recording procedures 
C. Internal audits and recording procedures 
D. Register manipulations and recording procedures 

Question # 6

The heart of book keeping system is the ___________.

A. Asset 
B. Liability 
C. Checkbook 
D. Journal 

Question # 7

Forced reconciliation of the account says:

A. to conceal shrinkage is to alter inventory record so that it matches the physical inventorycount. 
B. to conceal inventory is to alter shrinkage record so that it matches the physical inventorycount. 
C. to conceal shrinkage is to change the perpetual inventory record so that it matches thephysical inventory count. 
D. to conceal write-offs is to change the perpetual inventory record so that it matches thephysical inventory count. 

Question # 8

__________ is required if and when officers, executives or other persons in trustedpositions become subjects of a criminal indictment.

A. Conflict of interest 
B. Turnaround sale or flip 
C. Disclosure 
D. Resource diversion 

Question # 9

Which sale occurs when the accomplice of the employee-fraudster “buys” merchandise, but the employee does not ring up the sale, and the accomplice takes the merchandise withoutmaking any payment?

A. Whole sale 
B. Fake sale 
C. Fraudster sale 
D. Preliminary sale 

Question # 10

Which of the following is the criterion for bid solicitation?

A. Containing false statements 
B. Allowing the purchaser to discuss possible employment with the contractor 
C. To withdraw low bids 
D. To falsify the bid log 

Question # 11

In which approach, fraudsters produce whatever financial statements they wish, perhapsusing just a typewriter or a personal computer.

A. Organized accounting 
B. Playing the accounting 
C. Beating accounting 
D. Outside accounting system 

Question # 12

Which of the following is NOT standard of generally accepted accounting principles?

A. Conservatism 
B. Cost 
C. Full disclosure 
D. Quality control 

Question # 13

Which of the following are not of Basic types of non-sharable problems?

A. Violation of ascribed obligations 
B. Business reversals 
C. Physical Isolation 
D. Larceny by Fraud 

Question # 14

The most common method of detection in corruption cases is:

A. Internal audits 
B. Internal controls 
C. Tips 
D. By accident 

Question # 15

Financial statement fraud is committed by:

A. Organized criminals 
B. Mid and lower level employees 
C. Senior Management 
D. All of the above 

Question # 16

Inventory shrinkage is the unaccounted-for reduction in the company’s inventory that doesnot results from theft.

A. True 
B. False 

Question # 17

Any expenses that are incurred but not paid by the end of the year are counted in ourrecords of profit and loss, are called:

A. Accruals 
B. Depreciations 
C. Expenses 
D. Financial record 

Question # 18

When expenses used to produce income- all of them- should be matched in a consistentmanner against that income, this is referred to:

A. Equity 
B. Accrual basis accounting 
C. Expense 
D. Financial record

Question # 19

The prime targets for skimming schemes which are hard to monitor and predict such aslate fees and parking fees, are:

A. Revenue sources 
B. Recorded sales 
C. Internal audits 
D. Register manipulations 

Question # 20

Theft of incoming checks usually occurs when ________ is (are) in charge of opening themail and recording the receipt of payments.

A. Single employee 
B. Two employees 
C. More then two employees 
D. None of the above 

Question # 21

Most of the shell company schemes involve the purchase of goods rather than services.

A. True 
B. False 

Question # 22

A ___________ occurs when an employee, manager or executive has an undisclosedeconomic or personal interest in a transaction that adversely affects the organization.

A. Conflict of interest 
B. Illegal sale 
C. Unauthorized purchase 
D. Financial disclosure 

Question # 23

A journal in which all sales made on credit or cash are listed is:

A. Disbursement journal 
B. Accounts receivable journal 
C. Accounts payable journal 
D. General journal 

Question # 24

_________ normally are carried on an organization’s books as expenses because theytend to be consumed by the organization within a year of purchase.

A. Supplies 
B. Expenses 
C. Assets 
D. Equity 

Question # 25

Asset misappropriations have an effect on the liabilities and do also have an indirect effecton the equity account.

A. True 
B. False

Question # 26

Persuasive evidence of an arrangement does not exist when:

A. Revenue and corresponding expenses doesn’t match each other. 
B. No written or verbal agreement exists. 
C. Timings not meet properly 
D. Capitalized expenses and Liabilities will not be up to satisfied level 

Question # 27

Perceived certainty of detection is directly related to employee theft for respondents in allindustry sectors, that is the stronger the perception that theft would be detected, the morethe likelihood that the employee would engage in deviant behavior.

A. True 
B. False 

Question # 28

What is sometimes used to overcome well-designed internal controls of a victim company?

A. Shell company 
B. Fraudulent invoices 
C. Collusion 
D. Rubber stamp supervisors 

Question # 29

Placing any restriction in the solicitation documents that tend to restrict competition iscalled prebid solicitation.

A. True 
B. False 

Question # 30

The scheme which reduces victim companies to issue fraudulent payments for goods orservices that they have not received is called:

A. Bogus claims 
B. Billing scheme 
C. Reliance billing 
D. Misappropriate claims 

Question # 31

___________ should be examined to see that all are properly documented and thatinappropriate payments have not been made to employees.

A. Payable cash 
B. Cash advances 
C. counterfeit checks 
D. Payable checks 

Question # 32

According to accounting principles, ________ and ________ should be recorded or atchedin the same accounting period; failing to do so violates the matching principle of AAP.

A. Revenue and corresponding expenses 
B. Revenue and Income statement 
C. Income statement and Long-term contracts 
D. Capitalized expenses and Liabilities 

Question # 33

A shell company scheme in which actual goods or services are sold to the victim companyis known as:

A. Maintenance scheme 
B. Allocation scheme 
C. Distribution scheme 
D. Pass-through scheme 

Question # 34

The principle behind full disclosure is:

A. Any material deviation from GAAP must be explained to the reader of the financialinformation. 
B. Any material deviation from SAS must be explained to the writer oh the financialinformation. 
C. Any material deviation from GAAP must be explained to writer of the financialinformation. 
D. None of above 

Question # 35

Which of the following is not the skimming scheme?

A. Unrecorded sales 
B. Fraud & Cost 
C. Theft of checks through the mail 
D. Understand sales and receivables 

Question # 36

Every bribe is a two-sided transaction, in which where a vendor bribes a purchaser, there issomeone on the vendor’s side of the transaction who is not making an illicit payment.

A. True 
B. False 

Question # 37

Maintain the presence of a manager or supervisor near the area of the cash register as adeterrent to theft is a prevention for:

A. Fraudulent statement scheme 
B. Asset misappropriation scheme 
C. Larceny scheme 
D. Register disbursement scheme 

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