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 statements about the Sarbanes-Oxley Act of 2002 is true?

It eliminated the need for external audits of public companies.

It established stricter requirements for financial reporting and internal controls for public companies.

It was enacted to reduce the transparency of corporate financial statements.

It applies only to private companies in the United States.

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Verified step by step guidance

Understand the context of the Sarbanes-Oxley Act of 2002 (SOX): It was enacted in response to major corporate scandals (e.g., Enron, WorldCom) to improve corporate governance, enhance transparency, and restore investor confidence.

Review the key provisions of SOX: It established stricter requirements for financial reporting, internal controls, and accountability for public companies. This includes the creation of the Public Company Accounting Oversight Board (PCAOB) to oversee audits.

Analyze the incorrect options: The statement 'It eliminated the need for external audits of public companies' is false because SOX actually strengthened audit requirements. The statement 'It was enacted to reduce the transparency of corporate financial statements' is also false because SOX aimed to increase transparency. The statement 'It applies only to private companies in the United States' is incorrect because SOX applies to public companies, not private ones.

Identify the correct statement: The statement 'It established stricter requirements for financial reporting and internal controls for public companies' aligns with the purpose and provisions of SOX.

Conclude the analysis: The correct answer is the statement that reflects the intent and impact of the Sarbanes-Oxley Act of 2002, which is to establish stricter requirements for financial reporting and internal controls for public companies.