Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Sarbanes-Oxley Act

Financial Accounting

6. Internal Controls and Reporting Cash

Sarbanes-Oxley Act

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Multiple Choice

Which of the following is a requirement established by the Sarbanes-Oxley Act of 2002?

Private companies must file quarterly reports with the SEC.

All companies must use the cash basis of accounting.

The Act eliminates the need for independent auditors.

Public companies must have their internal control systems audited annually.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act of 2002: This legislation was enacted to improve corporate governance and accountability, primarily for public companies, following major corporate scandals. It focuses on enhancing internal controls, financial reporting, and auditor independence.

Identify the key requirement related to internal controls: The Act mandates that public companies must establish and maintain effective internal control systems to ensure accurate financial reporting.

Recognize the role of auditors: The Sarbanes-Oxley Act requires that public companies have their internal control systems audited annually by independent auditors. This ensures compliance and reliability in financial reporting.

Eliminate incorrect options: Review the provided options and discard those that are not aligned with the Act. For example, private companies are not required to file quarterly reports with the SEC, and the Act does not mandate the use of cash basis accounting or eliminate the need for independent auditors.

Select the correct answer: Based on the requirements of the Sarbanes-Oxley Act, the correct answer is that public companies must have their internal control systems audited annually.