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

An important provision of the Sarbanes-Oxley Act is that it:

Requires management to certify the accuracy of financial statements

Eliminates the need for external audits of public companies

Removes penalties for fraudulent financial reporting

Allows companies to set their own accounting standards

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Verified step by step guidance

Understand the Sarbanes-Oxley Act: The Sarbanes-Oxley Act (SOX) was enacted in 2002 to improve corporate governance and accountability in response to major financial scandals. It aims to protect investors by ensuring the accuracy and reliability of corporate financial statements.

Review the key provisions of SOX: One of the most important provisions is that management must certify the accuracy of financial statements. This means that executives, such as the CEO and CFO, are required to personally attest to the correctness of the financial reports.

Analyze the incorrect options: The Sarbanes-Oxley Act does not eliminate the need for external audits; in fact, it strengthens audit requirements. It also does not remove penalties for fraudulent financial reporting; instead, it imposes stricter penalties. Lastly, it does not allow companies to set their own accounting standards; it requires adherence to established standards like GAAP.

Identify the correct answer: Based on the provisions of SOX, the correct answer is the requirement for management to certify the accuracy of financial statements. This ensures accountability and reduces the risk of fraudulent reporting.

Summarize the importance: The certification requirement under SOX enhances transparency and trust in financial reporting, which is critical for investors and stakeholders in public companies.