Fraud Study Exam CFE Multi Choice
with Complete Solutions
A snapshot of activity memory should be done:
a) before seizure of the computer
b) after seizure of the computer but before turning off the computer
c) after turning off the computer but before calculation of the checksum number
d) after calculation of the checksum number but before searching - ANSWER-b) after
seizure of the computer but before turning off the computer
A vulnerability chart:
a) forces investigators to explicitly consider all aspects of fraud
b) shows the history of fraud in a company
c) identifies weaknesses in every aspect of a company's internal control
d) gives a detailed record of all the movements and activities of the suspect - ANSWER-
a) forces investigators to explicitly consider all aspects of fraud
Accounts that can be manipulated in revenue fraud include all of the following except:
a) ar
b) bad debt expense
c) inv
d) sales discounts - ANSWER-c) inv
All of the following are indicators of financial statement fraud except:
a) unusually rapid growth of profitability
b) threat of a hostile takeover
c) dependence on one or or two products
d) large amounts of available cash - ANSWER-d) large amounts of available cash
All of the following ratios are useful in detecting large revenue frauds except:
a) gross profit margin
b) current ratio
c) working capital turnover
d) ar turnover - ANSWER-b) current ratio
Although most perpetrators begin their thefts because of a perceived critical need, they
usually continue to embezzle in order to:
a) beat the system
b) fulfill an inner desire to commit fraud
c) improve their lifestyle
d) achieve a higher self-esteem - ANSWER-c) improve their lifestyle
Bankruptcy courts do not have which of the following responsibilities?
a) appointing trustees, examiners and committees
, b) supervising bankruptcy petitions
c) approving reorganization plans
d) conducting hearings and trials to resolve disputes - ANSWER-a) appointing trustees,
examiners and committees
Chain of custody refers to:
a) marking on a document so it can be identified later
b) a record of when a document is received and what has happened to it since its
receipt
c) databases used in trials to assist lawyers
d) the way in which courts are organized - ANSWER-b) a record of when a document is
received and what has happened to it since its receipt
Comparing recorded amounts in the financial statements with the real world assets they
are suppose to represent would be most effective in detecting:
a) cash and inv fraud
b) accounts payable fraud
c) revenue related fraud
d) ar fraud - ANSWER-a) cash and inv fraud
Conversion investigations focus on how suspects:
a) had opportunities to steal
b) had motives to commit fraud
c) spent stolen money
d) committed actual theft - ANSWER-c) spent stolen money
Discovery sampling:
a) is a type of variables sampling
b) is one of the more difficult statistical sampling methods to understand
c) is never used in conducting a fraud examination
d) deals with the probability - ANSWER-d) deals with the probability
Documentary evidence such as private tax returns can usually be obtained only by:
a) subpoena
b) search warrant
c) voluntary consent
d) all of the above - ANSWER-d) all of the above
Does not consider other factors relating to the auditee
a) zero order
b) high order
c) first order
d) fraudulent - ANSWER-a) zero order
During an audit, an auditor considers the conditions of the auditee and plans the the
audit accordingly:
with Complete Solutions
A snapshot of activity memory should be done:
a) before seizure of the computer
b) after seizure of the computer but before turning off the computer
c) after turning off the computer but before calculation of the checksum number
d) after calculation of the checksum number but before searching - ANSWER-b) after
seizure of the computer but before turning off the computer
A vulnerability chart:
a) forces investigators to explicitly consider all aspects of fraud
b) shows the history of fraud in a company
c) identifies weaknesses in every aspect of a company's internal control
d) gives a detailed record of all the movements and activities of the suspect - ANSWER-
a) forces investigators to explicitly consider all aspects of fraud
Accounts that can be manipulated in revenue fraud include all of the following except:
a) ar
b) bad debt expense
c) inv
d) sales discounts - ANSWER-c) inv
All of the following are indicators of financial statement fraud except:
a) unusually rapid growth of profitability
b) threat of a hostile takeover
c) dependence on one or or two products
d) large amounts of available cash - ANSWER-d) large amounts of available cash
All of the following ratios are useful in detecting large revenue frauds except:
a) gross profit margin
b) current ratio
c) working capital turnover
d) ar turnover - ANSWER-b) current ratio
Although most perpetrators begin their thefts because of a perceived critical need, they
usually continue to embezzle in order to:
a) beat the system
b) fulfill an inner desire to commit fraud
c) improve their lifestyle
d) achieve a higher self-esteem - ANSWER-c) improve their lifestyle
Bankruptcy courts do not have which of the following responsibilities?
a) appointing trustees, examiners and committees
, b) supervising bankruptcy petitions
c) approving reorganization plans
d) conducting hearings and trials to resolve disputes - ANSWER-a) appointing trustees,
examiners and committees
Chain of custody refers to:
a) marking on a document so it can be identified later
b) a record of when a document is received and what has happened to it since its
receipt
c) databases used in trials to assist lawyers
d) the way in which courts are organized - ANSWER-b) a record of when a document is
received and what has happened to it since its receipt
Comparing recorded amounts in the financial statements with the real world assets they
are suppose to represent would be most effective in detecting:
a) cash and inv fraud
b) accounts payable fraud
c) revenue related fraud
d) ar fraud - ANSWER-a) cash and inv fraud
Conversion investigations focus on how suspects:
a) had opportunities to steal
b) had motives to commit fraud
c) spent stolen money
d) committed actual theft - ANSWER-c) spent stolen money
Discovery sampling:
a) is a type of variables sampling
b) is one of the more difficult statistical sampling methods to understand
c) is never used in conducting a fraud examination
d) deals with the probability - ANSWER-d) deals with the probability
Documentary evidence such as private tax returns can usually be obtained only by:
a) subpoena
b) search warrant
c) voluntary consent
d) all of the above - ANSWER-d) all of the above
Does not consider other factors relating to the auditee
a) zero order
b) high order
c) first order
d) fraudulent - ANSWER-a) zero order
During an audit, an auditor considers the conditions of the auditee and plans the the
audit accordingly:
