Internal Control Systems

question 2

Multiple Choice

Internal control systems:

• A)are the responsibility of the external auditor
• B)include anti-fraud measures
• C)are designed to allow financial misrepresentation
• D)require that one person perform all aspects of a task
• E)all of the above

Recognize the components of the balanced scorecard approach and its perspective exclusion.

Determine the correct treatment of variance accounts within financial reporting.

Understand the implications of reporting costs at standard versus actual costs for external financial statements.

Understand the motives for holding money in an economy.

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Definitions:

Constructive Receipt

The tax principle that income is taxed when it is actually or constructively received, not necessarily when it is earned.

Control

The ability or authority to guide or manage operations, decisions, and policies of a business or project.

Income

Earnings received by an individual or entity, including wages, salaries, investments, and other forms of compensation, which are subject to tax.

Schedule B

A section of IRS tax forms for reporting interest and dividend income.