CFE-Fraud-Schemes-and-Financial-Crimes by ACFE Valid Free Exam Practice Test

Question 1

Which of the following statements is TRUE regarding cash-basis accounting?

A. Cash-basis accounting is more complex to use than accrual-basis accounting. B. Revenues are recorded in the accounting system when money is received. C. Expenses are recorded in the same period as the revenues they help generate. D. Revenues are generally recognized when services are provided to a customer.

Correct Answer: B

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Question 2

Horizontal analysis can BEST be described as:

A. A technique for measuring the relationship between any two different financial statement amounts. B. A technique for analyzing the relationships among items on the financial statement where components are expressed as percentages of a specified base value. C. A technique for comparing the performance of different companies in the same industry for an extended period. D. A technique for analyzing the percentage change in individual line items on a financial statement from one accounting period to the next accounting period.

Correct Answer: D

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Question 3

_____________ involves purposeful misreporting of financial information about the organization that is intended to mislead those who read it.

A. Asset misappropriations B. None of the above C. Corruption D. Fraudulent statement

Correct Answer: D

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Question 4

A special scheme in which employees know their employer is seeking to purchase a certain asset and take advantage of the situation by purchasing the asset themselves is:

A. Conflict of interest in sale B. Turnaround sale or flip C. Written sale of unique assets D. Unauthorized sale

Correct Answer: B

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Question 5

Bob, a purchasing agent for Gallenkamp, directed a portion of Gallenkamp's business to Oak Company. In exchange for receiving additional business, Oak Company's sales manager agreed to pay Bob a percentage of the extra profits. Which of the following BEST describes the type of corruption scheme in which Bob engaged?

A. Economic extortion scheme B. Kickback scheme C. Diversion scheme D. Illegal gratuity scheme

Correct Answer: B

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Question 6

A ____________ can be very costly for an organization to undertake, both in terms of money and time spent.

Correct Answer:

Investigation
* Rationale for Correct Answer: Fraud investigations can be highly costly to organizations. The process often involves external forensic examiners, legal proceedings, employee time, and disruption of operations. While necessary, investigations represent a significant resource commitment in terms of both time and financial cost.
* Key Concept: Fraud Investigation Costs - deterrence vs. response strategies.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Investigations section - Cost of Fraud Investigations .

Question 7

By removing a tangible asset from the business (a debit), the books will be ___________ by the exact amount of the tangible asset misappropriated.

A. Journal Entries B. None of all C. Out-of-balance D. False debits

Correct Answer: C

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Question 8

Which of the following elements is required for a contract, transaction, or scheme to qualify as an investment contract?

A. The investment resulted in profits solely due to the investor's own management efforts. B. The investment is in a common enterprise. C. The investment must have been made with cash. D. The investment was witnessed by a notary at the time it was made or entered into.

Correct Answer: B

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Question 9

__________ may be defined as the offering, giving, receiving, or soliciting anything of value to influence an official act.

A. Lacking approval authority B. Diverting business to vendors C. Bribery D. Corruption

Correct Answer: C

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Question 10

___________ allows the fraud examiner to inspect key attributes on a smaller portion (or sample) of those documents.

Correct Answer:

Sampling
* Rationale for Correct Answer: Sampling is a fraud examination technique that enables investigators to review a subset of documents rather than all records. Properly designed sampling provides reasonable assurance and allows focus on anomalies or red flags.
* Key Concept: Sampling in fraud examination and audit testing.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Fraud Examination Techniques
- Sampling and Document Review .

Question 11

Guillermo has received a grant to study the effectiveness of school lunch programs on students' mental health.
Guillermo's results are inconclusive, causing him to be concerned that he will lose funding for his project. As a result, Guillermo creates some data points that support his research and show that he is making progress.
Guillermo's actions can BEST be described as:

A. Inducement fraud B. Research misconduct C. Fraudulent concealment D. Fictitious claims fraud

Correct Answer: B

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Question 12

Which of the following statements about competitive intelligence is CORRECT?

A. Competitive intelligence refers to government-sanctioned activities conducted to collect protected information from a foreign government. B. Competitive intelligence is the process of acquiring information for commercial purposes through illegal, covert means. C. Competitive intelligence uses the same methods to obtain information that corporate espionage uses but focuses on patterns throughout a specific industry. D. Competitive intelligence aligns with research and development strategies and is often used to anticipate competitors' operating costs and pricing policies.

Correct Answer: D

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Question 13

Which of the following is a reason why prepaid debit and gift card fraud schemes are appealing to fraudsters?

A. Prepaid cards can be purchased with stolen credit cards and used to quickly convert illicit credit card funds into legitimate cash. B. Prepaid cards are often not accepted by online retailers and can only be used in transactions in which the cards must be physically present. C. All of the above are reasons why prepaid cards are appealing to fraudsters. D. Prepaid cards can only be purchased from financial institutions.

Correct Answer: A

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Question 14

A fraudster uses the name and picture of another individual to create a social media profile. This scheme can BEST be described as:

A. Synthetic identity theft B. New account identity theft C. Traditional identity theft D. Criminal identity theft

Correct Answer: C

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ACFE Certified Fraud Examiner -Fraud Schemes and Financial Crimes - CFE-Fraud-Schemes-and-Financial-Crimes Exam Practice Test