ESTUDYR
AP CERTIFICATION STUDY GUIDE-IOFM UPDATED EXAM WITH MOST
TESTED QUESTIONS AND ANSWERS | GRADED A+ | ASSURED SUCCESS
WITH DETAILED RATIONALES
1. A balance sheet is best described as:
A. A statement of cash receipts and disbursements.
B. A financial statement that reports Assets, Liabilities and Owner’s Equity. ✅
C. A record of revenue and expenses for a period.
D. A forecast of future cash flows.
Rationale: The balance sheet displays an entity’s financial position at a specific date: assets =
liabilities + owner’s equity.
2. What does UPIC stand for in electronic payments?
A. Universal Payment Identification Codes ✅
B. Unified Payment International Clearing
C. User Payment Instant Code
D. Unilateral Payment Identification Certificate
Rationale: UPICs (Universal Payment Identification Codes) are used to mask bank account
details for ACH transactions while routing payments correctly.
3. Positive Pay is best described as:
A. A payroll scheduling tool.
B. A bank service that speeds deposit posting.
C. An organization’s best defense against check fraud. ✅
D. A mechanism to authorize electronic invoices.
Rationale: Positive Pay matches checks presented for payment against a list of issued checks
(numbers, amounts), helping detect fraud.
4. Accrued expenses are:
A. Paid monthly and recorded when paid.
B. Incurred expenses that have not been paid in the current period. ✅
, ESTUDYR
C. Future budgeted expenses.
D. Prepaid assets to be expensed later.
Rationale: Accrued expenses are liabilities recognized for obligations incurred but not yet paid
(e.g., wages payable).
5. The Association of Certified Fraud Examiners (ACFE) categorizes occupational fraud into
three main branches. Which are they?
A. Embezzlement, identity theft, cyber fraud.
B. Fraudulent statements; corruption; asset misappropriation. ✅
C. Cash skimming, check fraud, payroll fraud.
D. Vendor fraud, payroll fraud, customer fraud.
Rationale: ACFE’s classic fraud triangle categorizes occupational fraud into fraudulent financial
statements, corruption, and asset misappropriation.
6. Corporate payment controls are primarily governed by:
A. Bank reconciliation only.
B. Vendor credit terms.
C. The invoice, the purchase order, and receiving documents. ✅
D. Departmental approval emails.
Rationale: Three-way matching (PO, invoice, receiving) is the cornerstone of controlling
corporate payments and preventing fraud/errors.
7. Which is a recommended way to reduce ACH fraud?
A. Reconcile accounts weekly and allow any ACH debits.
B. Reconcile accounts daily; use ACH credits & control debits with filters; use UPIC;
separate accounts. ✅
C. Rely on vendor trust only.
D. Stop using ACH entirely.
Rationale: Daily reconciliation, using UPICs, controlling debits via rules/filters, and separation of
accounts are best practices to limit ACH fraud exposure.
AP CERTIFICATION STUDY GUIDE-IOFM UPDATED EXAM WITH MOST
TESTED QUESTIONS AND ANSWERS | GRADED A+ | ASSURED SUCCESS
WITH DETAILED RATIONALES
1. A balance sheet is best described as:
A. A statement of cash receipts and disbursements.
B. A financial statement that reports Assets, Liabilities and Owner’s Equity. ✅
C. A record of revenue and expenses for a period.
D. A forecast of future cash flows.
Rationale: The balance sheet displays an entity’s financial position at a specific date: assets =
liabilities + owner’s equity.
2. What does UPIC stand for in electronic payments?
A. Universal Payment Identification Codes ✅
B. Unified Payment International Clearing
C. User Payment Instant Code
D. Unilateral Payment Identification Certificate
Rationale: UPICs (Universal Payment Identification Codes) are used to mask bank account
details for ACH transactions while routing payments correctly.
3. Positive Pay is best described as:
A. A payroll scheduling tool.
B. A bank service that speeds deposit posting.
C. An organization’s best defense against check fraud. ✅
D. A mechanism to authorize electronic invoices.
Rationale: Positive Pay matches checks presented for payment against a list of issued checks
(numbers, amounts), helping detect fraud.
4. Accrued expenses are:
A. Paid monthly and recorded when paid.
B. Incurred expenses that have not been paid in the current period. ✅
, ESTUDYR
C. Future budgeted expenses.
D. Prepaid assets to be expensed later.
Rationale: Accrued expenses are liabilities recognized for obligations incurred but not yet paid
(e.g., wages payable).
5. The Association of Certified Fraud Examiners (ACFE) categorizes occupational fraud into
three main branches. Which are they?
A. Embezzlement, identity theft, cyber fraud.
B. Fraudulent statements; corruption; asset misappropriation. ✅
C. Cash skimming, check fraud, payroll fraud.
D. Vendor fraud, payroll fraud, customer fraud.
Rationale: ACFE’s classic fraud triangle categorizes occupational fraud into fraudulent financial
statements, corruption, and asset misappropriation.
6. Corporate payment controls are primarily governed by:
A. Bank reconciliation only.
B. Vendor credit terms.
C. The invoice, the purchase order, and receiving documents. ✅
D. Departmental approval emails.
Rationale: Three-way matching (PO, invoice, receiving) is the cornerstone of controlling
corporate payments and preventing fraud/errors.
7. Which is a recommended way to reduce ACH fraud?
A. Reconcile accounts weekly and allow any ACH debits.
B. Reconcile accounts daily; use ACH credits & control debits with filters; use UPIC;
separate accounts. ✅
C. Rely on vendor trust only.
D. Stop using ACH entirely.
Rationale: Daily reconciliation, using UPICs, controlling debits via rules/filters, and separation of
accounts are best practices to limit ACH fraud exposure.
