Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

P AP E R F 1 ( F A B ) :
AC COU N TAN T IN B US INES S
 
48
KA P LA N P UBL I SH IN G 
213 ‘Window dressing’ involves which of the following: 
A 
Producing a overly detailed set of annual accounts in years when underlying results 
are poor 
B 
Entering into transactions just before the year-end that will improve the appearance 
of the accounts but will be reversed out soon after 
C 
Setting up bogus employees on the payroll system and paying their ‘salary’ into a 
specially created bank account 
D 
Misappropriation of business assets by managers 
(2 marks)
214 Off balance sheet accounting refers to which of the following:
A 
A focus on income and expenditure rather to the detriment of asset and liability 
management 
B 
Removal of business assets by employees for their own personal use 
C 
Diversion of assets from the balance sheet to a personal bank account 
D 
Deliberate exclusion of certain assets and liabilities from the published balance sheet 
(2 marks)
215 
Consider the following two statements: 
(1) 
A comprehensive system of control will eliminate all fraud and error.
(2) 
Employees working in departments other than Accounts have no responsibility for 
reporting fraud. 
Which of these options is/are correct? 
A (1) 
only 
B (2) 
only 
C Both 
D Neither 
(2 marks)
216 If an external auditor in the process of considering the company’s financial statement 
came across an incident of fraud that took place in the year, he/she must: 
A 
qualify the accounts regardless of the size of the fraud 
B 
report to the shareholders by way of a note to the accounts, regardless of the size of 
the fraud 
C 
qualify the accounts only if the fraud is material and not properly recorded in the 
accounts 
D 
report to the shareholders by way of a note to the accounts, but only if the fraud is 
material