CFE Exam- Financial Trans and Fraud
Schemes questions and answers
2025\2026 A+ Grade
The accounting concept of consistency prohibits any change in an accounting principle previously
employed.
A. True
B. False
- correct answer B. False
the concept of consistency does not completely prohibit changes in the accounting principles used.
Which of the following is NOT a method that is used to conceal inventory shrinkage?
A. Performing a forced reconciliation of the inventory records
B. Selling merchandise without recording the sale
C. Placing empty boxes on warehouse shelves
D. Writing off stolen inventory as scrap
- correct answer B. Selling merchandise without recording the sale
Selling merchandise without recording the sale would actually increase the amount of shrinkage on a
company's books
Which of the following types of accounts are decreased by debits?
A. Liabilities
B. Revenue
C. Owners' equity
D. All of the above
- correct answer D. All of the above
, To decrease the likelihood that a fraudster will be able to successfully wash a check, check issuers
should write with colored inks and ballpoint pens.
A. True
B. False
- correct answer B. False
colored inks and ball-point pens tend to be most susceptible to the chemicals used in check washing
schemes,
Bruce, a manager for a retail store, suspects his register employees of skimming sales. Bruce will be able
to detect this kind of scheme by comparing their register totals to the amount of money in their cash
drawers.
A. True
B. False
- correct answer B. False
it is impossible to detect theft by comparing the register to the cash drawer because the sale was not
recorded on the register.
Which of the following is NOT an appropriate technique for detecting a non-conforming goods or
services scheme?
A. Conduct unannounced inspections of questioned goods or materials.
B. Review the inspection and testing reports of questioned goods or materials.
C. Interview procurement personnel about the presence of any red flags.
D. Determine if contract costs have exceeded or are expected to exceed the contract value.
- correct answer D. Determine if contract costs have exceeded or are expected to exceed the contract
value.
The statement of changes in owners' equity acts as the connecting link between which two financial
statements?
A. Statement of cash flows and balance sheet
B. Income statement and balance sheet
C. Balance sheet and statement of retained earnings
D. Income statement and statement of cash flows
- correct answer B. Income statement and balance sheet
Schemes questions and answers
2025\2026 A+ Grade
The accounting concept of consistency prohibits any change in an accounting principle previously
employed.
A. True
B. False
- correct answer B. False
the concept of consistency does not completely prohibit changes in the accounting principles used.
Which of the following is NOT a method that is used to conceal inventory shrinkage?
A. Performing a forced reconciliation of the inventory records
B. Selling merchandise without recording the sale
C. Placing empty boxes on warehouse shelves
D. Writing off stolen inventory as scrap
- correct answer B. Selling merchandise without recording the sale
Selling merchandise without recording the sale would actually increase the amount of shrinkage on a
company's books
Which of the following types of accounts are decreased by debits?
A. Liabilities
B. Revenue
C. Owners' equity
D. All of the above
- correct answer D. All of the above
, To decrease the likelihood that a fraudster will be able to successfully wash a check, check issuers
should write with colored inks and ballpoint pens.
A. True
B. False
- correct answer B. False
colored inks and ball-point pens tend to be most susceptible to the chemicals used in check washing
schemes,
Bruce, a manager for a retail store, suspects his register employees of skimming sales. Bruce will be able
to detect this kind of scheme by comparing their register totals to the amount of money in their cash
drawers.
A. True
B. False
- correct answer B. False
it is impossible to detect theft by comparing the register to the cash drawer because the sale was not
recorded on the register.
Which of the following is NOT an appropriate technique for detecting a non-conforming goods or
services scheme?
A. Conduct unannounced inspections of questioned goods or materials.
B. Review the inspection and testing reports of questioned goods or materials.
C. Interview procurement personnel about the presence of any red flags.
D. Determine if contract costs have exceeded or are expected to exceed the contract value.
- correct answer D. Determine if contract costs have exceeded or are expected to exceed the contract
value.
The statement of changes in owners' equity acts as the connecting link between which two financial
statements?
A. Statement of cash flows and balance sheet
B. Income statement and balance sheet
C. Balance sheet and statement of retained earnings
D. Income statement and statement of cash flows
- correct answer B. Income statement and balance sheet
