C213 Accounting study Guide || 100% Correct Answers.
Errors correct answers result when unintentional mistakes are made in recording transactions
posting transactions, summarizing accounts and so forth
disagreement correct answers result when different people arrive at different conclusions based
on the same set of facts
frauds correct answers deceptive concealment of transactions or creation of fictitious transactions
control environment correct answers the actions, policies, and procedures that reflect the overall
attitudes of top management about control and its importance to the entity
control activities correct answers policies and procedures used by management to meet their
objectives
What are the various elements of an internal control system correct answers authorization, record
keeping, custody of assets
What is earning management? correct answers provides background on how and why companies
manipulate their reported financial performance; general issue of corporate governance
Why does earning management occur? correct answers circumstances can result in good people
being put in pressure situations that result in their making poor choices
What is SOX? correct answers Congress passed Sarbanes-Oxley Act, which increased the the US
federal government oversight of the audit process and preparation of the financial statements
, What is the PACOB and what does it do? correct answers Public Company Accounting
Oversight Board; 5 FT members established by SOX to oversee the accounting and auditing
profession
Who are and what is the role of external auditors in the accounting process? correct answers
Independent CPS's hired by the company to examine an organization's financial statements to
determine if they are prepared and presented in accordance with GAAP and are free from
material misstatement
Who are internal auditors and what is their role in the accounting process? correct answers an
independent group of experts in controls, accounting, operations; monitor operating results and
financial records, evaluates internal controls, assists w/ increasing the efficiency and
effectiveness of operations, and detect fraud
What is the role of the SEC? correct answers examines financial records (statements) for
completeness and adequacy before permitting companies to sell securities through securities
exchanges
What was the effect of the 1934 SEC act on independent auditors? correct answers requires all
public companies to file detailed periodic reports with the SEC. If the rules of operation for stock
exchanges prove to be ineffectual in implementing the requirements of the SEC, the SEC can
alter or supplement them.
If the total amt of rent expense is inadvertently posted to prepaid rent at the end of the year what
is this? correct answers error
Under SOX what must the CEO and CFO of every public company do? correct answers prepare
and sign a statement to accompany their financial statements that certifies the appropriateness of
the financial statements and disclosures contained in the report
What are the 5 categories of control activities? correct answers segregation of duties, proper
procedures for authorizations, physical control over assets and records, adequate documents and
records, independent checks on performance
Errors correct answers result when unintentional mistakes are made in recording transactions
posting transactions, summarizing accounts and so forth
disagreement correct answers result when different people arrive at different conclusions based
on the same set of facts
frauds correct answers deceptive concealment of transactions or creation of fictitious transactions
control environment correct answers the actions, policies, and procedures that reflect the overall
attitudes of top management about control and its importance to the entity
control activities correct answers policies and procedures used by management to meet their
objectives
What are the various elements of an internal control system correct answers authorization, record
keeping, custody of assets
What is earning management? correct answers provides background on how and why companies
manipulate their reported financial performance; general issue of corporate governance
Why does earning management occur? correct answers circumstances can result in good people
being put in pressure situations that result in their making poor choices
What is SOX? correct answers Congress passed Sarbanes-Oxley Act, which increased the the US
federal government oversight of the audit process and preparation of the financial statements
, What is the PACOB and what does it do? correct answers Public Company Accounting
Oversight Board; 5 FT members established by SOX to oversee the accounting and auditing
profession
Who are and what is the role of external auditors in the accounting process? correct answers
Independent CPS's hired by the company to examine an organization's financial statements to
determine if they are prepared and presented in accordance with GAAP and are free from
material misstatement
Who are internal auditors and what is their role in the accounting process? correct answers an
independent group of experts in controls, accounting, operations; monitor operating results and
financial records, evaluates internal controls, assists w/ increasing the efficiency and
effectiveness of operations, and detect fraud
What is the role of the SEC? correct answers examines financial records (statements) for
completeness and adequacy before permitting companies to sell securities through securities
exchanges
What was the effect of the 1934 SEC act on independent auditors? correct answers requires all
public companies to file detailed periodic reports with the SEC. If the rules of operation for stock
exchanges prove to be ineffectual in implementing the requirements of the SEC, the SEC can
alter or supplement them.
If the total amt of rent expense is inadvertently posted to prepaid rent at the end of the year what
is this? correct answers error
Under SOX what must the CEO and CFO of every public company do? correct answers prepare
and sign a statement to accompany their financial statements that certifies the appropriateness of
the financial statements and disclosures contained in the report
What are the 5 categories of control activities? correct answers segregation of duties, proper
procedures for authorizations, physical control over assets and records, adequate documents and
records, independent checks on performance
