Question 1. Identify the Major reporting requirements associated with each of the following:
a. Securities Act of 1933
b. Securities and Exchange Act of 1934
c. 10-K report
d. 10-Q report
Question 2. Identify each of the following:
a. The private sector organization that is responsible for setting financial accounting standards in the United States.
b. The private sector organization that is responsible for setting state and local governmental accounting standards in the United States.
c. The organization that exists to influence the development of international accounting standards.
d. The federal agency that oversees accounting at the federal government.
e. The organization responsible for the enforcement of financial accounting standards in the United States.
Question 3. Mag’s pie shop is a rapidly growing baker and distributor of specialty pies for festive occasions. Mag’s CPA adviser keeps recommending that Mag install better internal controls over the business. Specifically, the CPA recommends that Mag separate the company’s record keeping function from the physical control of cash and other assets. The CPA also recommends that Mag use only preprinted and pre-numbered forms for all business transactions.
a. What is the purpose of internal controls? Please be specific.
b. For each internal control suggested by the CPA, please give one example of an unsatisfactory situation or event that the control would prevent.
Question 4. Consider each of the following situations.
a. Sales clerks in a retail store are assigned to a specific cash register. They are given a cash drawer containing $100 in change at the teginnthg of their shifts. They are required to record the amount of each purchase in the cash register. The cash register records an identification and price for each item purchased. Cash payments are collected from customers and placed in the cash drawer. A copy of the cash register sales slip is given to the customer. At the end of each shift, the employee takes the cash drawer and cash register tape to a supervisor who counts the cash, verifies the sales. and signs an approval form. The sales clerk also signs the form that identifies the amount of cash and amount of sales for the day.
b. A ticket seller at a movie theater is issued a cash drawer wth $100 change and a roll of prenumbered tickets when the theater opens each day. The seller collects cash from customers and issues the tickets. Each customer hands a ticket to a ticket taker who tears the ticket in half and gives half back to the customer. At the end of the day. the ticket sever returns the cash drawer and tickets to a supervisor.
For each of the above. please discuss why the procedures are used and how they provide effective internal control.