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Chapter 7: Q1DC (page 430)

Conduct an Internet search for information on internal control and the Sarbanes-Oxley Act. Write a report of your findings. In your account, discuss some of the advantages and disadvantages of the Sarbanes-Oxley Act. Present it to your class (if required by your instructor).

Short Answer

Expert verified

Four main areas in which the Sarbanes-Oxley Act focused

  • Increasing criminal punishment
  • Accounting regulation
  • New protections
  • Corporate responsibility

Step by step solution

01

Definition of the Sarbanes-Oxley Act

The Sarbanes -Oxley Act is established in 2002. This act is established for auditing and the financial regulations of the company.

02

Advantages of the Sarbanes-Oxley Act

  1. The first advantage of the Sarbanes-Oxley is that it provides more accurate accounting. This act makes rules and regulations for the companies that make the companies鈥� accounting more accurate.
  2. The second advantage of the Sarbanes-Oxley Act is that it gives more information to the companies. Because this act states that the companies鈥� financial statements must be accurate and no mispresent of the data is present in the financial statements.
  3. The third advantage of the act is that the accountant is personally liable for any mispresent in the financial statements
03

Disadvantages of the Sarbanes-Oxley Act

  1. The first disadvantage of this act is that it includes high costs.
  2. The second disadvantage of the act is that it negatively affects the profitability of the company because this act denied some criteria to decide the profitability of the company. This will negatively affect the profitability of the company

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Most popular questions from this chapter

Accounting for petty cash transactions

Suppose that on September 1, Cool Gyrations, a disc jockey service, create a petty

cash fund with an imprest balance of \(350. During September, Ruth Mangan, fund

custodian, signs the following petty cash tickets:

Petty Cash

Ticket Number Item Amount

1 Postage for package received \) 25

2 Office party 10

3 Two boxes of stationery 20

4 Printer cartridges 15

5 Business dinner 65

On September 30, prior to replenishment, the fund contains these tickets plus cash of

\(210. The accounts affected by petty cash payments are Office Supplies, Entertainment

Expense, and Postage Expense.

Requirements

1. On September 30, how much cash should this petty cash fund hold before it is

replenished?

2. Journalize all required entries to (a) create the fund and (b) replenish it. Include

explanations.

3. Make the entry on October 1 to increase the fund balance to \)425. Include an

Explanation

List some examples of timing differences, and for each difference, determine if it would affect the book side of the reconciliation or the bank side of the reconciliation.

What are two common methods used when accepting deposits for credit card and debit card transactions?

When are the only times the Petty Cash account is used in a journal entry?

Evaluating internal control over cash receipts Dogtopia sells pet supplies and food and handles all sales with a cash register. The cash register displays the amount of the sale. It also shows the cash received and any change returned to the customer. The register also produces a customer receipt butkeeps no internal record of the transactions. At the end of the day, the clerk counts the cash in the register and gives it to the cashier for deposit in the company bank account.

Requirements

1. Identify the internal control weakness over cash receipts.

2. What could you do to correct the weakness?
See all solutions

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