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Free CFE Practice Questions

10 free, exam-style Certified Fraud Examiner (CFE) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CFE practice test to study every exam domain.

Question 1

What is the fundamental accounting equation?

  1. Assets = Liabilities + Revenue
  2. Assets = Liabilities + Owner's Equity
  3. Assets + Liabilities = Owner's Equity
  4. Revenue - Expenses = Net Income
Show answer & explanation

Correct answer: B - Assets = Liabilities + Owner's Equity

Question 2

A company purchases equipment for $50,000 cash. How does this transaction affect the accounting equation?

  1. Total assets increase by $50,000
  2. Total assets remain unchanged
  3. Total liabilities increase by $50,000
  4. Owner's equity increases by $50,000
Show answer & explanation

Correct answer: B - Total assets remain unchanged

Question 3

When a company takes out a bank loan, which elements of the accounting equation are affected?

  1. Assets and owner's equity both increase
  2. Assets and liabilities both increase
  3. Liabilities increase and owner's equity decreases
  4. Only liabilities increase
Show answer & explanation

Correct answer: B - Assets and liabilities both increase

Question 4

In double-entry accounting, every transaction must:

  1. Affect only one account
  2. Be recorded in the general journal only
  3. Affect at least two accounts and keep debits equal to credits
  4. Increase total assets
Show answer & explanation

Correct answer: C - Affect at least two accounts and keep debits equal to credits

Question 5

Which financial statement shows a company's financial position at a specific point in time?

  1. Income Statement
  2. Statement of Cash Flows
  3. Balance Sheet
  4. Statement of Retained Earnings
Show answer & explanation

Correct answer: C - Balance Sheet

Question 6

The Income Statement reports:

  1. Assets, liabilities, and equity at a point in time
  2. Revenue, expenses, and net income over a period
  3. Cash inflows and outflows over a period
  4. Changes in retained earnings over a period
Show answer & explanation

Correct answer: B - Revenue, expenses, and net income over a period

Question 7

Which section of the Statement of Cash Flows includes cash received from customers?

  1. Investing activities
  2. Financing activities
  3. Operating activities
  4. Supplemental activities
Show answer & explanation

Correct answer: C - Operating activities

Question 8

A company issuing stock for cash would report this transaction in which section of the Statement of Cash Flows?

  1. Operating activities
  2. Investing activities
  3. Financing activities
  4. Non-cash activities
Show answer & explanation

Correct answer: C - Financing activities

Question 9

The purchase of a building with cash is classified as which type of activity on the Statement of Cash Flows?

  1. Operating activity
  2. Investing activity
  3. Financing activity
  4. Non-cash activity
Show answer & explanation

Correct answer: B - Investing activity

Question 10

The Statement of Changes in Equity would include all of the following EXCEPT:

  1. Dividends declared
  2. Net income for the period
  3. Stock issuances
  4. Cash received from customers
Show answer & explanation

Correct answer: D - Cash received from customers

What's on the CFE exam

The Certified Fraud Examiner (CFE) exam is organized into 4 knowledge domains. These free practice questions are drawn from across them so you can see where you're strong and where to study:

  1. Financial Transactions and Fraud Schemes
  2. Law
  3. Investigation
  4. Fraud Prevention and Deterrence

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