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 is true of the Sarbanes-Oxley Act?

It requires public companies to establish internal controls over financial reporting.

It was enacted to reduce the amount of financial disclosure required by companies.

It applies only to private companies in the United States.

It eliminates the need for external audits of financial statements.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act (SOX): The Sarbanes-Oxley Act was enacted in 2002 in response to major corporate scandals. Its primary purpose is to enhance corporate governance and strengthen the reliability of financial reporting by requiring stricter internal controls and accountability for public companies.

Analyze the first statement: 'It requires public companies to establish internal controls over financial reporting.' This is a key provision of SOX, as it mandates that public companies implement and maintain effective internal controls to ensure the accuracy and reliability of their financial statements.

Evaluate the second statement: 'It was enacted to reduce the amount of financial disclosure required by companies.' This is incorrect because SOX actually increases the level of financial disclosure and transparency required from public companies.

Assess the third statement: 'It applies only to private companies in the United States.' This is incorrect because SOX applies specifically to public companies, not private companies.

Review the fourth statement: 'It eliminates the need for external audits of financial statements.' This is incorrect because SOX emphasizes the importance of external audits and requires auditors to assess the effectiveness of a company's internal controls over financial reporting.