Pass Using CFE-Financial-Transactions-and-Fraud-Schemes Exam Dumps

Detailed Explanation:

Rationale for Correct Answer:This description reflects asymmetrical accounting, which is based on the conservatism principle. Possible losses are recorded, but potential gains are omitted until realized. This creates an asymmetry in recognizing losses versus gains.

Analysis of Incorrect Options:

B. Symmetrical accounting – Would recognize gains and losses equally, contrary to conservatism.

C. Playing accounting – Fraud scheme, not a principle.

D. Bearing accounting – Not a recognized concept.

Key Concept:Asymmetry in accounting — conservative recognition of losses versus gains.

Detailed Explanation:

Rationale for Correct Answer:By definition, Equity (or net assets) represents the residual interest in the assets of an entity after deducting liabilities. This aligns with the basic accounting equation: Assets = Liabilities + Equity. Thus, the difference between assets and liabilities is Equity.

Analysis of Incorrect Options:

B. Expense – A cost incurred in earning revenue, not residual interest.

C. Revenue – Inflows from operations, not assets minus liabilities.

D. Income statement – A financial report, not a balance sheet component.

Key Concept:Equity as residual interest in the accounting equation.

Detailed Explanation:

Rationale for Correct Answer:Per generally accepted accounting principles, changes in accounting principles must be disclosed in the financial statements to ensure comparability and transparency. The ACFE notes that disclosures are critical to prevent misleading users of financial statements.

Analysis of Incorrect Options:

A. Subsequent events – Material subsequent events must be disclosed; this statement is false.

B. Contingent losses – Only probable and reasonably estimable losses must be disclosed. If unlikely, no disclosure is required.

C. All information – Only material information requires disclosure.

Key Concept: Disclosure requirements in financial reporting.

Detailed Explanation:

Rationale for Correct Answer:Cash larceny involves stealing cash after it has been recorded. Mark stole $50 directly from the register after recording sales, which is a cash larceny scheme.

Analysis of Incorrect Options:

A. Paul’s scheme – This is skimming (off-book theft), not larceny.

B. Emily’s scheme – This is a lapping scheme (concealing theft of receivables), not pure larceny.

C. Sarah/Jenna – This is an overstated refund scheme (fraudulent disbursement), not larceny.

Key Concept: Cash larceny vs. skimming vs. fraudulent disbursements.