Question

1.It is important that the management of a company does not prepare false and misleading financial statements mainly because:

Group of answer choices

A) Those statements are used by users outside of the company to make important decisions.

B) The IRS will fine the company if false financial statements are prepared.

C)The management of the company might use bad information when using the statements for internal decision making.

D) None of the above.

2.Which of the following statements is False regarding the internal control system in a business?

A) A key factor in the internal control environment of many companies is a corporate code of ethics, which prohibits transactions with conflicts of interest, and it may also encourage good citizenship and corporate social responsibility.

B) Requiring employees to take annual vacation is a characteristic of safeguard controls. However, collusion is the method widely used to defeat the adequate segregation of duties.

C) If a company uses a sophisticated IT system, the basic attributes of internal control are the same as under a manual system.

D) Encryption limits a legitimate user's access to hardware and software or access to data within a database.

Answer 1

1. Answer = Option A, the financial statements of company are generally used by outsider users. they uses this information to make a decision regarding of making investment in particular company or not. if company provides misleading financial statement then investors decision decision might get wrong.

2. Answer = Option C, A company uses the IT sophisticated IT System, the basic attributes of internal control are became different under mannual system. there IT control also gets changed like in IT operated company they uses authority level access of equipment in high level areas so there are no chances of lower level employee can get access of that equipment.