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

The Sarbanes-Oxley Act requires that companies must:

Report financial statements only once every five years.

Eliminate all forms of external auditing.

Establish and maintain adequate internal controls over financial reporting.

Allow only the CEO to prepare the company's tax returns.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act (SOX): The Sarbanes-Oxley Act was enacted in 2002 to improve corporate governance and accountability. It primarily focuses on ensuring the accuracy and reliability of financial reporting and preventing corporate fraud.

Identify the key requirement: One of the main provisions of SOX is that companies must establish and maintain adequate internal controls over financial reporting. This ensures that financial statements are accurate and free from material misstatements.

Clarify misconceptions: The incorrect options in the problem include reporting financial statements only once every five years, eliminating external auditing, and allowing only the CEO to prepare tax returns. These are not requirements under SOX and contradict its purpose of enhancing transparency and accountability.

Relate internal controls to financial reporting: Internal controls are processes and procedures designed to safeguard assets, ensure accurate financial reporting, and comply with laws and regulations. SOX mandates that management must assess and report on the effectiveness of these controls.

Understand the broader implications: SOX also requires external auditors to evaluate the effectiveness of internal controls, and CEOs and CFOs must certify the accuracy of financial statements. This reinforces the importance of internal controls in maintaining trust and integrity in financial reporting.