FAC2601 EXAM SCRIPT VERIFIED
QUESTIONS AND SOLUTIONS COMPLETE
REVIEW MATERIAL
●● Misappropriation of Assets
Answer: Occurs when employees steal money from their companies and
cover it up by falsifying accounting records
●● Fraudulent Financial Reporting
Answer: Committed by company managers who make false and
misleading accounting entries to try to make their company's financial
result appear better than they are
●● Internal Control
Answer: A plan of organization and a system of procedure implemented
by company management and the board of directors designed to
accomplish five objectives
●● Five Objectives of Internal Control
Answer: -Safeguard Assets
-Encourage Employees to follow policies
-Promote Operational efficiency
-Ensure accurate, reliable accounting records
,-Comply with legal requirements
●● Five Components of Internal Control
Answer: -Control Environment
-Risk Assessment
-Information System
-Control Procedures
-Monitoring of Controls
●● Exception Reporting
Answer: THe process of identifying data that s not witihin "normal
limits" so managers can follow up on it and take corrective action
●● Controller
Answer: The chief accounting officer of a business
●● Budget
Answer: A policy document allocating burdens (taxes) and benefits
(expenditures).
●● Operating Budget
Answer: Budget for the net income of future periods
, ●● Cash Receipts
Answer: Budget for the cash receipts and cash disbursements of future
periods
●● Audit
Answer: An examination of a company's financial statements and its
accounting system, including its control
●● Internal Auditor
Answer: An employee of the business who ensures the company's
employees are following company policies, that the company meets all
legal requirements, and that operations are running efficiently.
●● External Auditor
Answer: A certified public accounting firm that attests that the
accounting practices followed by the organization are sound and that the
financial reports fairly represent the state of the business
●● Fidelity Bond
Answer: An insurance policy that reimburses the company for any loss
due to employee theft
●● Imprest System
Answer: Maintaining the petty cash account at a particular balance
QUESTIONS AND SOLUTIONS COMPLETE
REVIEW MATERIAL
●● Misappropriation of Assets
Answer: Occurs when employees steal money from their companies and
cover it up by falsifying accounting records
●● Fraudulent Financial Reporting
Answer: Committed by company managers who make false and
misleading accounting entries to try to make their company's financial
result appear better than they are
●● Internal Control
Answer: A plan of organization and a system of procedure implemented
by company management and the board of directors designed to
accomplish five objectives
●● Five Objectives of Internal Control
Answer: -Safeguard Assets
-Encourage Employees to follow policies
-Promote Operational efficiency
-Ensure accurate, reliable accounting records
,-Comply with legal requirements
●● Five Components of Internal Control
Answer: -Control Environment
-Risk Assessment
-Information System
-Control Procedures
-Monitoring of Controls
●● Exception Reporting
Answer: THe process of identifying data that s not witihin "normal
limits" so managers can follow up on it and take corrective action
●● Controller
Answer: The chief accounting officer of a business
●● Budget
Answer: A policy document allocating burdens (taxes) and benefits
(expenditures).
●● Operating Budget
Answer: Budget for the net income of future periods
, ●● Cash Receipts
Answer: Budget for the cash receipts and cash disbursements of future
periods
●● Audit
Answer: An examination of a company's financial statements and its
accounting system, including its control
●● Internal Auditor
Answer: An employee of the business who ensures the company's
employees are following company policies, that the company meets all
legal requirements, and that operations are running efficiently.
●● External Auditor
Answer: A certified public accounting firm that attests that the
accounting practices followed by the organization are sound and that the
financial reports fairly represent the state of the business
●● Fidelity Bond
Answer: An insurance policy that reimburses the company for any loss
due to employee theft
●● Imprest System
Answer: Maintaining the petty cash account at a particular balance
