Harris Paper Final 5 (2) (1)

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Harris SEC Filings and the EDGAR Database Sherika Harris ACC 201 Principles of Financial Accounting Professor Judith Bowser 03/13/2023

Harris SEC Filings and the EDGAR Database Around 87 years have passed since the founding of the Securities and Exchange Commission, or SEC. It came into being in 1934. On June 6, 1934, President Franklin D. Roosevelt established the SEC. In order to combat the terrible economic repercussions of the Great Depression and avert any upcoming market catastrophes, President Franklin D. Roosevelt viewed the SEC as a new deal program (History, 2019). The SEC assisted in giving businesses a feeling of security so that they could operate successfully and have a way to properly file and maintain the money invested in the business or organization. The SEC's goals are to safeguard investors, support capital development, and uphold fair, orderly, and efficient markets. Corporate fraud was a serious issue before the SEC was established, deceiving investors into thinking a company was worthwhile and secure to invest in. Investors can access a public and open internet database called EDGAR (Electronic Data Gathering Analysis and Retrieval) that houses financial data about publicly traded companies. Anyone looking to learn more about a company can access the Electronic Data Gathering, Analysis and Retrieval System (EDGAR), a public database that is free to use. In order to comply with the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, and the Investment Company Act of 1940, firms and other corporations have traditionally submitted documents through EDGAR (Sec,2020). Since the EDGAR database helps to improve the efficiency, transparency, and fairness of the securities markets, investors can discover more about the companies they are interested in. Investors can also research information provided by individuals, variable annuities, exchange-traded funds (ETFs), and mutual funds through EDGAR. Examining the company's SEC filings has allowed us to conduct this investigation. Investors can further research if a business would be a promising

Harris investment to purchase using the records available inside EDGAR based on the filings of documents provided by public firms showing how the company has performed over time (Lacoma, Rawes, 2020). This figure was calculated as of the year 2020, but it has gone up as of the year 2021. For a monthly price of $13 or an annual fee of $119, Amazon Prime members receive a ton of subscriptions with a variety of products like video content, music, books, and more (Lacoma, Rawes, 2020). For customers, Amazon functions as a one-stop shop where they can find anything they need or want at competitive pricing. They used their extra capital to buy investment-grade short- to intermediate-term fixed income instruments and money market funds with a AAA rating (Amazon, 2018). Amazon's decision to put their extra cash in money markets with an A+ rating contributes to the stability of fixed-income instruments. This is a great investment for investors since Amazon keeps investing more money into the business as it grows, which helps the company produce cash flow and expand on the stock market. Using Annual Reports from Amazon's submission to the U.S. Securities and Exchange Commission Annual Report 10-K forms, investors can evaluate the financial performance and risk of Amazon.com. The SEC's 10-K form for the Annual Report Amazon will present Investors with The assets, liabilities, and equity of Amazon are listed in its balance sheet. There are two categories of assets and liabilities: current assets and liabilities and non-current assets and liabilities. Assets serve as a representation of a company's resources, assisting entrepreneurs and financial experts in identifying the company's holdings (Indeed, 2021). Liabilities, on the other hand, are a company's debts that show what it owes; as for total

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Harris liabilities, they are then deducted from assets to determine the company's equity or book value. Instead, investors can establish if the company is valued by comparing the book value to the market value. Form 10-K SEC filings An annual report detailing a publicly traded company's financial performance is called a 10-K SEC filing. The 10-K form contains the company's annual report that was distributed to shareholders prior to the annual meeting to help with director elections. It also contains information on the background of the business, its organizational structure, financial statements, earnings per share, subsidiaries, executive compensation, and any other pertinent information (Kenton, 2020). A company's success is fully explained in its 10-K SEC filing, which also aids in choosing the following director. The 10-K form refers to Amazon's evaluation of its financial performance since it gives investors the necessary information about how the business is doing and enables them to decide whether to invest in Amazon. Annual Reports Annual reports are documents that publicly traded firms give to their shareholders every year. The financial situation and operational history of the company are detailed in the annual report. The front portion of the annual report includes a combination of illustrations, images, and a narrative that describes the company's operations throughout the previous year. Also, it might offer company projections (Hayes,2020). Detailed financial and operational information about

Harris the company is provided on the report's back. The annual report contributes to provide background information about a company's operational status. Management Discussion and Analysis The management discussion and analysis, often known as the C-suite, is used by the company's management and executives. The success of the company is examined by these senior officers using both qualitative and quantitative metrics. Hence, compliance, risk, and objectives like goals and new initiatives that can contribute to a satisfactory performance for the organization are all included in the management discussion and analysis. This is relevant to Amazon since the C-suite assists the corporation in identifying internal weaknesses that could harm performance and addresses them before they arise. Management’s Responsibility for Financial Reporting In terms of management's accountability for financial reporting, management is in charge of creating and maintaining a suitable internal control system. This entails protecting assets from unauthorized purchase, usage, or disposal (Marroo, 2020). Also, management is in charge of creating the financial statements and relevant disclosures for the organization. This is relevant to Amazon since without its management team, the SEC would not have completed and made available to investors financial disclosures. Management’s Report on Internal Control over Financial Reporting Management is accountable for establishing and deciding an adequate internal control structure and procedure for financial reporting and for maintaining it. This responsibility is reflected in the management's report on internal control over financial reporting. According to

Harris the U.S. Securities and Exchange Commission, "Section 404 of the Sarbanes-Oxley Act of 2002 requires rules requiring that each annual report that a company files under Section 13(a) or 15(d) of the Exchange Act, other than a registered investment company, contain an internal control report" (U.S. Securities and Exchange Commissions, 2021). The evaluation made by management must be attested to and reported on by every registered public accounting firm that drafts or issues an audit report on a company's annual financial statements, according to Section 404. Auditors’ Report Management is accountable for establishing and deciding an adequate internal control structure and procedure for financial reporting and for maintaining it. This responsibility is reflected in the management's report on internal control over financial reporting. According to the U.S. Securities and Exchange Commission, "Section 404 of the Sarbanes-Oxley Act of 2002 requires rules requiring that each annual report that a company files under Section 13(a) or 15(d) of the Exchange Act, other than a registered investment company, contain an internal control report" (U.S. Securities and Exchange Commissions, 2021). The evaluation made by management must be attested to and reported on by every registered public accounting firm that drafts or issues an audit report on a company's annual financial statements, according to Section 404. Selected Financial Data The chosen financial data is a shortened section of a financial statement that gives a quick description of the organization (McBride, 2016). Liabilities, debt, earnings, dividends, and assets are the components of the outline, which is used to evaluate a company's financial strengths and shortcomings. This information is used by investors to decide whether a firm is a good

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Harris investment for them. Amazon is related to financial data because management evaluates this information to identify Amazon's advantages and disadvantages. Financial Statement Notations (IS, SE, BS, &SCF) Amount ($ in Millions) Balances present in financial statements 1. Accounts payable 16,459 Balance Sheet (BS) 2. Accounts receivable 5,612 Balance Sheet (BS) 3. Cash 14,557 Statement of Cash flow (SCF) & Balance Sheet (BS) 4. Cost of sales 62,752 Income Statement (IS) 5. Income tax expense 167 Income Statement (IS) 6. Interest expense 210 Income Statement (IS) 7. Inventories 8,299 Balance Sheet (BS) 8. Net cash provided by operating activities 6,842 Statement of Cash flow (SCF) 9. Net cash flows used for investing activities (5,065) Statement of Cash flow (SCF) 10. Net sales 88,988 Income Statement (IS) 11. Other expense 118 Income Statement (IS) 12. Other income 76 Balance Sheet (BS) 13. Property, plant, and 16,967 Balance Sheet (BS)

Harris other long-term assets 14. Selling, general, and administrative expenses 26,058 Income Statement (IS) 15. Retained earnings (Dec. 31) 2,190 Stockholders’ Equity (SE) & Balance Sheet (BS) Amazon Income Statement Income statement provided below follows by the year ending on December 31st for Amazon. The amounts provided are in million. Revenue: Net sales- $ 513,983 Cost of sales- $ 288,831 Gross profit- $225,152 Less Operating Expenses: Selling, general, and administrative responses- $26,236 Total operating expenses- $26,058 Income from Operations: Gross Profit-Operating Expense -$ 178

Harris Other Revenues and Gain (Expense and Losses): Other expenses- $ 118 Interest Expense- $ 210 Other Income- ($ 76) Income from continuing operations: (178-252) = -$74 Income Before Tax: -$74 Income Tax Expense: -$167 Net Loss: -$241 To help investors stay aware of the financial data given by publicly traded companies, the SEC established the EDGAR database. It was discussed how EDGAR applies to Amazon and why it is crucial given the company's financial statements and other papers that make up its annual report. In terms of the database that EDGAR offers, it is free internet access to the financial data from publicly traded firms that can help investors decide if the company is one, they should invest in. The SEC's three main mandates are recalling what was said before,

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Harris protecting investors, ensuring fair, orderly, and efficient markets, and fostering capital formation. Businesses are then held responsible for any misunderstandings resulting from wrongly completed legal paperwork, and investors are informed whether a corporation is performing well based on its stocks and other financial data. Overall, the SEC gives investors a feeling of security, and companies give the information required for any organization to grow based on the performance demonstrated. References: Amazon.com. (2018). Annual reports, proxies and shareholder letters (Links to an external site.). Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual Hargrave, M. (2020, September 30). Why You Should Read a 10-K’s Management Discussion and Analysis (MD&A). Investopedia. https://www.investopedia.com/terms/m/mdanalysis.asp#: %7E:text=Management %20discussion%20and%20analysis%20%28MD%26A%29%20is%20a %20section,future%20plans%2C%20such%20as%20goals%20and%20new%20projects. Hayes, A. (2020, November 8). Annual Reports: What You Need to Know. Investopedia. https://www.investopedia.com/terms/a/annualreport.asp History.com Editors. (2019, December 6). SEC: Securities and Exchange Commission.

Harris HISTORY. https://www.history.com/topics/us-government/securities-and-exchangecommission Indeed, Editorial Team. (2021, November 3). Assets and Liabilities: Types and Differences (With Examples). Indeed, Career Guide. https://www.indeed.com/career-advice/careerdevelopment/assets-and- liabilities Kenton, W. (2020, March 16). What You Should Know About 10-Ks. Investopedia. https://www.investopedia.com/terms/1/10-k.asp Kenton, W. (2021, February 8). Auditor’s Report. Investopedia. https://www.investopedia.com/terms/a/auditorsreport.asp Marroo, Ixeia. “What Is Management's Responsibility for Financial Reporting?” Tree Hozz, 19 Feb. 2020, https://treehozz.com/what-is-managements-responsibility-for-financialreporting.