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The Sarbanes-Oxley Act (SOX)

The Sarbanes-Oxley Act (SOX)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Sarbanes-Oxley Act (SOX) requires which of the following conditions or practices? The CEO and CFO must also perform an audit of the financial statements. All auditors must have a minimum of 20 years experience. Management must take responsibility for establishing and maintaining adequate internal controls. Auditors must be employees of the company they are auditing. Which of the following options is true for a classified balance sheet? Is the same as an unclassified balance sheet Reports current and noncurrent retained earnings Orders assets based on liquidity Classifies common stock into current and long-term Assume a company has the following information: Note Payable: $200,000 Interest Rate: 6% Issue Date: May 1, Year 1 Year-end: December 31, Year 1 Maturity: January 31, Year 2 Which of the following options will the journal entry on the note's maturity date include? A debit to Interest Expense for $12,000 A credit to Notes Payable for $200,000 A credit to Cash for $209,000 A credit to Cash for $212,000 Fortune Tea Co. estimates warranty costs to be 5% of sales. The sales for the period was $450,000. What does the journal entry to record warranty expense for the period include? Credit to Estimated Warranty Payable $22,500 Debit to Estimated Warranty Payable $22,500 O Credit to Warranty Expense $22,500 Debit to Cash for $22,500
Transcribed Image Text:The Sarbanes-Oxley Act (SOX) requires which of the following conditions or practices? The CEO and CFO must also perform an audit of the financial statements. All auditors must have a minimum of 20 years experience. Management must take responsibility for establishing and maintaining adequate internal controls. Auditors must be employees of the company they are auditing. Which of the following options is true for a classified balance sheet? Is the same as an unclassified balance sheet Reports current and noncurrent retained earnings Orders assets based on liquidity Classifies common stock into current and long-term Assume a company has the following information: Note Payable: $200,000 Interest Rate: 6% Issue Date: May 1, Year 1 Year-end: December 31, Year 1 Maturity: January 31, Year 2 Which of the following options will the journal entry on the note's maturity date include? A debit to Interest Expense for $12,000 A credit to Notes Payable for $200,000 A credit to Cash for $209,000 A credit to Cash for $212,000 Fortune Tea Co. estimates warranty costs to be 5% of sales. The sales for the period was $450,000. What does the journal entry to record warranty expense for the period include? Credit to Estimated Warranty Payable $22,500 Debit to Estimated Warranty Payable $22,500 O Credit to Warranty Expense $22,500 Debit to Cash for $22,500
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