ACCT 2013 Test 1 - UARK Fowler With Complete
Solutions!!
Types of Adjusting Entries (4)
1) Prepaids
2) Deferred Revenue
3) Accrued Expenses
4) Accrued Revenue
Closing Entries (RED is DEAD)
Revenue, Expenses & Dividend accounts are temporary & must be closed & put into
retained earnings.
(Get rid of ur side hoes (RED) & put all your time & money into ur main hoe (retained
earnings))
Companies issue incorrect financial statements for 2 reasons:
1) Errors
2) Fraud
Occupational Fraud
the use of one's occupation for personal enrichment through the deliberate misuse or
misapplication of the employer's resources.
1) 1st Source of occupational fraud is misuse of company resources.
2) 2nd Source involves financial statement manipulation
,CA$H is the asset most commonly involved in fraud.
The Fraud Triangle
Opportunity- the situation allows fraud to occur.
Motivation- someone feels the need to commit fraud, such as the need for money.
Rationalization- the excuse of the fraudulent act by the perpetrator.
Internal Controls Represent a Company's Plan to.
1) Safeguard the company's assets.
2) Increase the accuracy & reliability of accounting information.
To eliminate opportunity, companies implement formal policies & procedures known as.
Internal Controls
T/F?
Internal controls remove the opportunity element of fraud?
True
, Sarbanes-Oxley Act of 2002
º Also referred to as "SOX".
º The act had set various regulations with respect to auditor-client relations & internal
control procedures.
º Require auditors to retain work papers for 7 years.
º Require that an audit firm is appointed by the audit committee of the board of
directors.
Key Provisions of SOX
1) Requiring that corporate executives certify financial statements.
2) requiring documentation & assessing effectiveness of internal controls.
3) restricting the practice of auditors in order to prevent conflict of interest.
Internal Control Components
1) control environment
2) risk assessment
3) control activities
Solutions!!
Types of Adjusting Entries (4)
1) Prepaids
2) Deferred Revenue
3) Accrued Expenses
4) Accrued Revenue
Closing Entries (RED is DEAD)
Revenue, Expenses & Dividend accounts are temporary & must be closed & put into
retained earnings.
(Get rid of ur side hoes (RED) & put all your time & money into ur main hoe (retained
earnings))
Companies issue incorrect financial statements for 2 reasons:
1) Errors
2) Fraud
Occupational Fraud
the use of one's occupation for personal enrichment through the deliberate misuse or
misapplication of the employer's resources.
1) 1st Source of occupational fraud is misuse of company resources.
2) 2nd Source involves financial statement manipulation
,CA$H is the asset most commonly involved in fraud.
The Fraud Triangle
Opportunity- the situation allows fraud to occur.
Motivation- someone feels the need to commit fraud, such as the need for money.
Rationalization- the excuse of the fraudulent act by the perpetrator.
Internal Controls Represent a Company's Plan to.
1) Safeguard the company's assets.
2) Increase the accuracy & reliability of accounting information.
To eliminate opportunity, companies implement formal policies & procedures known as.
Internal Controls
T/F?
Internal controls remove the opportunity element of fraud?
True
, Sarbanes-Oxley Act of 2002
º Also referred to as "SOX".
º The act had set various regulations with respect to auditor-client relations & internal
control procedures.
º Require auditors to retain work papers for 7 years.
º Require that an audit firm is appointed by the audit committee of the board of
directors.
Key Provisions of SOX
1) Requiring that corporate executives certify financial statements.
2) requiring documentation & assessing effectiveness of internal controls.
3) restricting the practice of auditors in order to prevent conflict of interest.
Internal Control Components
1) control environment
2) risk assessment
3) control activities
