ACFE Updated CFE-Financial-Transactions-and-Fraud-Schemes Exam Questions and Answers by hoorain

Detailed Explanation:

Rationale for Correct Answer:The journal is specifically the chronological record of transactions. Each entry captures date, accounts affected, amounts, and explanation, making it the foundational record before posting to the ledger.

Analysis of Incorrect Options:

A. Asset – Not a record, but a resource.

C. Checkbook – Only records cash movements, not all transactions.

D. Ledger – Summarizes accounts, but not in chronological order.

Key Concept:Chronological recording of transactions via the journal.

Detailed Explanation:

Rationale for Correct Answer:Irregular, low-value, or unpredictable revenue sources such as parking fees, late charges, or vending machine sales are prime skimming targets. Because they are difficult to estimate or reconcile precisely, theft of these funds is less likely to be detected quickly.

Analysis of Incorrect Options:

B. Recorded sales – These are already in the books and easier to reconcile.

C. Internal audits – A control mechanism, not a target.

D. Register manipulations – A method, not the revenue source itself.

Key Concept:Vulnerable revenue streams as skimming targets.

Detailed Explanation:

Rationale for Correct Answer:Physical inventory counts involve actually counting items on hand and comparing them to book records. These counts can reveal theft, errors, or shrinkage when discrepancies are identified.

Analysis of Incorrect Options:

A. Perpetual inventory counts – The system tracks expected balances but cannot independently confirm theft.

C. Concealment inventory counts – Not a recognized term.

D. None of the above – Incorrect, since physical counts do aid detection.

Key Concept:Physical inventory counts as a fraud detection tool.

Detailed Explanation:

Rationale for Correct Answer:Common skimming schemes include unrecorded sales, theft of incoming checks, and understating sales/receivables. “Fraud & Cost” is not a recognized skimming scheme and appears to be a distractor.

Analysis of Incorrect Options:

A. Unrecorded sales – A classic skimming method.

C. Theft of checks through the mail – Another recognized skimming approach (incoming receivables).

D. Understated sales and receivables – A concealment method within skimming schemes.

B. Fraud & Cost – Not a scheme classification.

Key Concept:Skimming schemes vs. unrelated distractors.