WGU D551 OBJECTIVE ASSESSMENT 2026
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QUESTIONS AND CORRECT ANSWERS
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1. Which element of the fraud triangle is most directly reduced by segregation of
duties?
• A. Pressure
• B. Opportunity
• C. Rationalization
• D. Capability
Correct Answer: B
Rationale: Segregation of duties limits access and reduces the opportunity to
commit and conceal fraud. It does not directly address pressure or rationalization,
which are personal factors. Capability is an element of the fraud diamond, not the
fraud triangle.
2. An employee steals cash before it is recorded in the accounting system. This is
classified as:
• A. Cash larceny
• B. Skimming
• C. Billing fraud
• D. Check tampering
Correct Answer: B
,Rationale: Skimming occurs when cash is stolen before it is recorded in the
accounting system. Cash larceny occurs after the cash has been recorded. Billing
fraud involves creating false invoices, and check tampering involves altering
checks.
3. Which of the following best defines fraud?
• A. An accounting error caused by negligence
• B. A breach of contract
• C. An intentional act of deception resulting in personal or financial gain
• D. Misinterpretation of accounting standards
Correct Answer: C
Rationale: Fraud is defined as an intentional act of deception for personal or
financial gain. Unlike errors or negligence, fraud requires intent. A breach of
contract and misinterpretation of standards do not necessarily involve intentional
deception.
4. A company records revenue before goods are shipped. This most likely
indicates:
• A. Expense understatement
• B. Channel stuffing
• C. Premature revenue recognition
• D. Inventory theft
Correct Answer: C
Rationale: Recording revenue before goods are shipped violates revenue
recognition principles and indicates premature revenue recognition. Channel
stuffing involves shipping more goods than demand justifies, while inventory theft
involves stealing goods.
,5. Which of the following is a key element of the COSO internal control
framework's control environment component?
• A. Independent internal audit function
• B. Management's philosophy and operating style
• C. Physical controls over assets
• D. Information systems controls
Correct Answer: B
Rationale: The control environment includes management's philosophy, operating
style, integrity, and ethical values—often described as "tone at the top."
Independent internal audit, physical controls, and information systems controls are
part of other COSO components .
6. In a financial statement fraud investigation, which red flag is most indicative of
revenue recognition manipulation?
• A. A sudden increase in accounts receivable turnover
• B. A decline in gross margin while revenue increases
• C. A significant increase in revenue without a corresponding increase in cash
flow from operations
• D. A decrease in the allowance for doubtful accounts while sales are flat
Correct Answer: C
Rationale: Revenue recognized but not collected in cash suggests that sales may
be fictitious or recorded prematurely. Accounts receivable turnover would
decrease, not increase, with revenue manipulation. Gross margin decline is not
directly tied to revenue recognition .
7. What is the primary objective of forensic accounting?
, • A. Prepare financial statements
• B. Ensure GAAP compliance
• C. Investigate financial information suitable for use in legal proceedings
• D. Detect mathematical errors
Correct Answer: C
Rationale: Forensic accounting involves investigating financial information for
use in legal proceedings. Preparing financial statements and ensuring GAAP
compliance are roles of traditional accounting, and detecting mathematical errors is
a basic accounting function .
8. The three components of the Fraud Triangle are:
• A. Motive, opportunity, risk
• B. Pressure, intent, concealment
• C. Pressure, opportunity, rationalization
• D. Incentive, access, reward
Correct Answer: C
Rationale: The Fraud Triangle consists of pressure (motive/incentive), opportunity
(ability to commit and conceal), and rationalization (justification for the act).
Motive, intent, concealment, incentive, access, and reward do not represent the
correct three components .
9. Which of the following schemes is classified as corruption under the ACFE
Fraud Tree?
• A. A cashier skimming cash from a sale before it is recorded
• B. An employee submitting false expense reports for personal travel
• C. A purchasing agent receiving kickbacks from a supplier for awarding
contracts
LATEST EXAM WITH ACTUAL EXAM
QUESTIONS AND CORRECT ANSWERS
(100% VERIFIED ANSWERS) |NEWEST
UPDATES!!!
1. Which element of the fraud triangle is most directly reduced by segregation of
duties?
• A. Pressure
• B. Opportunity
• C. Rationalization
• D. Capability
Correct Answer: B
Rationale: Segregation of duties limits access and reduces the opportunity to
commit and conceal fraud. It does not directly address pressure or rationalization,
which are personal factors. Capability is an element of the fraud diamond, not the
fraud triangle.
2. An employee steals cash before it is recorded in the accounting system. This is
classified as:
• A. Cash larceny
• B. Skimming
• C. Billing fraud
• D. Check tampering
Correct Answer: B
,Rationale: Skimming occurs when cash is stolen before it is recorded in the
accounting system. Cash larceny occurs after the cash has been recorded. Billing
fraud involves creating false invoices, and check tampering involves altering
checks.
3. Which of the following best defines fraud?
• A. An accounting error caused by negligence
• B. A breach of contract
• C. An intentional act of deception resulting in personal or financial gain
• D. Misinterpretation of accounting standards
Correct Answer: C
Rationale: Fraud is defined as an intentional act of deception for personal or
financial gain. Unlike errors or negligence, fraud requires intent. A breach of
contract and misinterpretation of standards do not necessarily involve intentional
deception.
4. A company records revenue before goods are shipped. This most likely
indicates:
• A. Expense understatement
• B. Channel stuffing
• C. Premature revenue recognition
• D. Inventory theft
Correct Answer: C
Rationale: Recording revenue before goods are shipped violates revenue
recognition principles and indicates premature revenue recognition. Channel
stuffing involves shipping more goods than demand justifies, while inventory theft
involves stealing goods.
,5. Which of the following is a key element of the COSO internal control
framework's control environment component?
• A. Independent internal audit function
• B. Management's philosophy and operating style
• C. Physical controls over assets
• D. Information systems controls
Correct Answer: B
Rationale: The control environment includes management's philosophy, operating
style, integrity, and ethical values—often described as "tone at the top."
Independent internal audit, physical controls, and information systems controls are
part of other COSO components .
6. In a financial statement fraud investigation, which red flag is most indicative of
revenue recognition manipulation?
• A. A sudden increase in accounts receivable turnover
• B. A decline in gross margin while revenue increases
• C. A significant increase in revenue without a corresponding increase in cash
flow from operations
• D. A decrease in the allowance for doubtful accounts while sales are flat
Correct Answer: C
Rationale: Revenue recognized but not collected in cash suggests that sales may
be fictitious or recorded prematurely. Accounts receivable turnover would
decrease, not increase, with revenue manipulation. Gross margin decline is not
directly tied to revenue recognition .
7. What is the primary objective of forensic accounting?
, • A. Prepare financial statements
• B. Ensure GAAP compliance
• C. Investigate financial information suitable for use in legal proceedings
• D. Detect mathematical errors
Correct Answer: C
Rationale: Forensic accounting involves investigating financial information for
use in legal proceedings. Preparing financial statements and ensuring GAAP
compliance are roles of traditional accounting, and detecting mathematical errors is
a basic accounting function .
8. The three components of the Fraud Triangle are:
• A. Motive, opportunity, risk
• B. Pressure, intent, concealment
• C. Pressure, opportunity, rationalization
• D. Incentive, access, reward
Correct Answer: C
Rationale: The Fraud Triangle consists of pressure (motive/incentive), opportunity
(ability to commit and conceal), and rationalization (justification for the act).
Motive, intent, concealment, incentive, access, and reward do not represent the
correct three components .
9. Which of the following schemes is classified as corruption under the ACFE
Fraud Tree?
• A. A cashier skimming cash from a sale before it is recorded
• B. An employee submitting false expense reports for personal travel
• C. A purchasing agent receiving kickbacks from a supplier for awarding
contracts
