Question 1

Delivery has not occurred or services have not been rendered when:

Accepted Answer

The answer of Delivery has not occurred or services have...

Question 2

The excess credits (or debits) on the income statement are used to decrease (or increase) the equity account.

Accepted Answer

Excess credits or debits on the income statement affect net income, which in turn impacts retained earnings, a component of equity, but they do not directly decrease or increase the equity account.

Question 3

Skimming cases can more likely to be detected by:

Accepted Answer

The answer of Skimming cases can more likely to be...

Question 4

Which of the following is not the skimming scheme?

Accepted Answer

Fraud & Cost is not a skimming scheme; it is a broader category that can include various types of fraud, not specifically related to skimming. Skimming schemes typically involve the theft of cash before it is recorded in the accounting system.

Question 5

The prime targets for skimming schemes which are hard to monitor and predict such as late fees and parking fees, are:

Accepted Answer

Revenue sources are the best choice for skimming schemes as they involve cash transactions that are not always easily tracked, making them vulnerable to skimming. Late fees and parking fees fall under this category. Recorded sales and internal audits are more closely monitored and harder to manipulate, while register manipulations may be easier to detect with the use of advanced technology.

Question 6

Employees steal an incoming payment and then place the incoming funds in an interest bearing account for:

Accepted Answer

Short-term skimming involves temporarily diverting incoming funds for personal gain, such as earning interest, before eventually depositing them into the intended account.

Question 7

Which of the following are used in a short-term skimming scheme?

Accepted Answer

Short-term skimming schemes often involve unrecorded sales, understated sales, and theft of incoming checks, as these methods allow for quick and direct access to cash without leaving a trace.

Question 8

Employees with the authority to grant discounts in order to skim revenues may use which authority?

Accepted Answer

False discounts are when an employee applies a discount to a sale but keeps the money for themselves instead of giving it to the customer or the company. This is a form of fraud and is unethical behavior. The other options do not address this specific issue.

Question 9

The amount of cash on hand in a register may be compared to the amount showing in the register tape in order to detect _______.

Accepted Answer

Comparing the cash on hand in a register to the amount recorded in the register tape is a common method for detecting employee theft, as discrepancies may indicate that an employee has taken cash from the register. It is not as effective for detecting recorded sales, internal audits, or occupational frauds.

Question 10

What can make it easy for an employee to skim sales or receivables?

Accepted Answer

Poor collection and recording procedures can make it easy for an employee to skim sales or receivables as there may be no proper checks and balances in place to prevent fraudulent activities. Options A, C, and D all mention recording procedures, which may deter or catch fraudulent activities, making them less likely to facilitate skimming.

Question 11

Theft of incoming checks usually occurs when ________ is (are) in charge of opening the mail and recording the receipt of payments.

Accepted Answer

When a single employee is in charge of opening the mail and recording receipt of payments, it becomes easier for them to steal incoming checks. This is because there is no one else to check or double-check the handling of checks. Having at least two employees in charge of these tasks provides an additional level of oversight and can make it more difficult for any one individual to commit theft.

Question 12

When an incorrect total is carried from the journal to the ledger or from ledger to the financial statements, this method is called:

Accepted Answer

When an incorrect total is carried from the journal to the ledger or from ledger to the financial statements, this method is called Forced Balance.

Question 13

Skimming is:

Accepted Answer

Skimming is the act of removing cash from a victim entity before it is recorded in an accounting system. This can be done by stealing cash from daily sales, accounts receivable payments, or any other source of cash before it is officially recorded.

Question 14

Entering a sales total lower than the amount actually paid by the customer is called:

Accepted Answer

Entering a sales total lower than the amount actually paid by the customer is called underrings a sale. The other options (B and C) are unrelated to this particular action.

Question 15

Financial statement fraud is committed by:

Accepted Answer

Financial statement fraud can be committed by individuals at all levels of an organization, including senior management, mid-level employees, and lower-level employees.

Question 16

___________ and __________ are used to increase (or decrease) the equity account.

Accepted Answer

Journal entries and transactions are used to record changes in the equity account, whether increasing or decreasing it.

Question 17

According to fraud tree, cash has three following schemes:

Accepted Answer

Skimming, cash larceny, and fraudulent disbursements are the most common schemes of cash fraud according to the fraud tree. Skimming involves stealing cash before it is recorded in the company's books, cash larceny involves stealing cash after it is recorded in the company's books, and fraudulent disbursements involve making unauthorized payments. Therefore, option A is the best choice.

Question 18

The most basic skimming scheme occurs when:

Accepted Answer

Skimming occurs when an employee fails to record sales transactions and keeps the money for personal use. Choice A describes the most basic skimming scheme, where the employee collects the customer's payment but makes no record of the sale. Choices B, C, and D do not accurately describe skimming.

Question 19

Once the expense account is closed, it becomes a historical item and probably will never be reviewed again.

Accepted Answer

Once the expense account is closed, it is no longer used in the accounting process and is considered a historical item. It is unlikely to be reviewed again unless there is a specific need to do so.

Question 20

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

Accepted Answer

When a tangible asset is misappropriated (stolen or removed without authorization), a debit (an entry that decreases assets) is removed from the business, which will cause the books to be out-of-balance by the exact same amount. This means that the total debits and the total credits will no longer match, and the books will need to be adjusted to correct the imbalance. Choices A, C, and D are not relevant to the situation described.

Exam 1: Certified Fraud Examiner