FAC Study Guide 2026
Everything you need to pass the FAC exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📚 FAC Topics to Study (69)
✍️ Sample FAC Questions & Answers
1. Which of the following scenarios best illustrates a situation of adverse selection in corporate debt markets?
Adverse selection occurs when information asymmetry causes lenders to attract a disproportionate share of high-risk borrowers at any given interest rate.
2. The kiddie tax applies a child's unearned income in excess of the threshold at:
The kiddie tax subjects a child's net unearned income above the threshold to tax at the parent's marginal rate to prevent income shifting.
3. Which of the following is NOT a requirement for deducting business meals at 50% under current law?
Post-TCJA, entertainment expenses are fully disallowed; meals are deductible at 50% without any entertainment component requirement — in fact, meals must be separated from entertainment.
4. Which of the following is a characteristic of a rolling (continuous) budget?
A rolling budget continuously extends the planning horizon by adding a new period whenever the most recent one expires, keeping the forecast window constant.
5. Which ethical framework holds that certain rules or duties must be followed regardless of the outcome, because the act itself is inherently right or wrong?
Deontological ethics (associated with Immanuel Kant) requires following moral rules or duties because they are right in themselves, not because of the consequences.
6. A 'key risk indicator' (KRI) in operational risk management is used to:
Key risk indicators are metrics that signal increasing risk exposure before an adverse event occurs, enabling proactive risk management.