Problem 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
Problem 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.
Problem 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.
Problem 4. Consider each of the fokwing stuations.
a. Sales clerks n a retal store are assigned to a specific cash register. They are given a cash drawer contanng $100 m change at the beginnng of then 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 tem purchased. Cash payments are colected from customers and placed n 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 seler at a movie theater is issued a cash drawer wth $100 change and a roll of prenuntered tickets when the theater opens each day. The seler collects cash from customers and issues the tickets. Each customer hands a ticket to a ticket taker who tears the ticket n half and gives half back to the customer. At the end of the day, the ticket seller 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