LSU ACCT 4235 MIDTERM EXAM REVIEW
QUESTIONS WITH 100% VERIFIED
ANSWERS AND EXPLANATIONS
1. Investment scams most often include:
A. an action by top management against employees
B. worthless investments or assets sold to unsuspecting investors
C. an overcharge for purchased goods
D. nonpayment of invoices for goods purchased by customers
B. worthless investments or assets sold to unsuspecting investors
Explanation: Investment scams typically involve selling fake or
worthless assets to victims who believe they are making a
legitimate investment.
2. Which of the following is not a common type of fraud?
A. direct employee embezzlement
B. employee bribes
C. executives embezzling from petty cash
D. investment scams
C. executives embezzling from petty cash
Explanation: Executives rarely embezzle petty cash because they
have access to much larger funds and would not risk their position
for small amounts.
3. Which of the following characters is least likely to be involved in a
fraud?
A. a middle-aged person with a middle management position
, B. a long-haired teenager
C. a senior executive who has significant stock options
D. a recent college graduate
B. a long-haired teenager
Explanation: Stereotypes about appearance (like long hair) are not
reliable fraud indicators; fraud is committed by people in positions
of trust and access, not based on youthful appearance.
4. Which of the following is required to become a CFE?
A. an individual must commit to abide by a strict code of
professional conduct and ethics
B. be an associate member, in good standing, of the ACFE
C. be of high moral character
D. all of the above are required
D. all of the above are required
Explanation: To become a Certified Fraud Examiner, a person must
meet all three requirements: commit to the ACFE Code of
Professional Ethics, be an associate member in good standing, and
demonstrate high moral character.
5. Which of the following statements is true?
A. All frauds that are detected by organizations are made public.
B. One of the most common responses to fraud is disbelief by
those around the fraud.
C. Many companies choose to make their losses from fraud public
rather than try to hide them.
D. The only group/business that must report employee
embezzlement is the federal government.
B. One of the most common responses to fraud is disbelief by
those around the fraud.
, Explanation: When fraud is discovered, coworkers and managers
often cannot believe the perpetrator would commit such acts, so
disbelief is a very common reaction.
6. What is the best way to minimize fraud expense within an
organization?
A. effective early detection of fraud
B. effective investigation of fraudulent behavior
C. effective prevention of fraud
D. effective research of fraud
C. effective prevention of fraud
Explanation: Preventing fraud before it happens eliminates losses
entirely, which is far less expensive than detecting and
investigating after the fact.
7. What is the most important element in successful fraud schemes?
A. promised benefits
B. confidence in the perpetrator
C. profitable activities
D. complexity
B. confidence in the perpetrator
Explanation: Victims must trust the fraudster; without confidence,
the victim will not hand over money or assets.
8. Which of the following is not an important element of fraud?
A. confidence
B. deception
C. trickery
D. intelligence
D. intelligence
QUESTIONS WITH 100% VERIFIED
ANSWERS AND EXPLANATIONS
1. Investment scams most often include:
A. an action by top management against employees
B. worthless investments or assets sold to unsuspecting investors
C. an overcharge for purchased goods
D. nonpayment of invoices for goods purchased by customers
B. worthless investments or assets sold to unsuspecting investors
Explanation: Investment scams typically involve selling fake or
worthless assets to victims who believe they are making a
legitimate investment.
2. Which of the following is not a common type of fraud?
A. direct employee embezzlement
B. employee bribes
C. executives embezzling from petty cash
D. investment scams
C. executives embezzling from petty cash
Explanation: Executives rarely embezzle petty cash because they
have access to much larger funds and would not risk their position
for small amounts.
3. Which of the following characters is least likely to be involved in a
fraud?
A. a middle-aged person with a middle management position
, B. a long-haired teenager
C. a senior executive who has significant stock options
D. a recent college graduate
B. a long-haired teenager
Explanation: Stereotypes about appearance (like long hair) are not
reliable fraud indicators; fraud is committed by people in positions
of trust and access, not based on youthful appearance.
4. Which of the following is required to become a CFE?
A. an individual must commit to abide by a strict code of
professional conduct and ethics
B. be an associate member, in good standing, of the ACFE
C. be of high moral character
D. all of the above are required
D. all of the above are required
Explanation: To become a Certified Fraud Examiner, a person must
meet all three requirements: commit to the ACFE Code of
Professional Ethics, be an associate member in good standing, and
demonstrate high moral character.
5. Which of the following statements is true?
A. All frauds that are detected by organizations are made public.
B. One of the most common responses to fraud is disbelief by
those around the fraud.
C. Many companies choose to make their losses from fraud public
rather than try to hide them.
D. The only group/business that must report employee
embezzlement is the federal government.
B. One of the most common responses to fraud is disbelief by
those around the fraud.
, Explanation: When fraud is discovered, coworkers and managers
often cannot believe the perpetrator would commit such acts, so
disbelief is a very common reaction.
6. What is the best way to minimize fraud expense within an
organization?
A. effective early detection of fraud
B. effective investigation of fraudulent behavior
C. effective prevention of fraud
D. effective research of fraud
C. effective prevention of fraud
Explanation: Preventing fraud before it happens eliminates losses
entirely, which is far less expensive than detecting and
investigating after the fact.
7. What is the most important element in successful fraud schemes?
A. promised benefits
B. confidence in the perpetrator
C. profitable activities
D. complexity
B. confidence in the perpetrator
Explanation: Victims must trust the fraudster; without confidence,
the victim will not hand over money or assets.
8. Which of the following is not an important element of fraud?
A. confidence
B. deception
C. trickery
D. intelligence
D. intelligence
