SI –Acct 284Chapter 5 1. Who are the 4 main user groups of financial statements?2. What 3 things must exist for accounting fraud to occur?3. What is the Sarbanes Oxley Act?4. ___________________ is the most significant change to the financial reporting environment in the United States.5. What are 3 major business opportunity incentives for committing accounting fraud?6. What are 3 major personal greed incentives for committing accounting fraud?7. In what three ways did SOX Act of 2002 reduce incentive to commit fraud?8. What are three ways that SOX reduces opportunities to commit fraud?9. What are three ways that SOX encourages good character?10. Match each of the following SOX requirements to the corresponding element of the fraudtriangle by entering the appropriate letter in the space provided______ Establish a tip line for employees to report questionable acts______ Increase maximum fines to $5 million.______ Require management to report on effectiveness of internal controls______ Legislate whistle-blower protections______ Require external auditors report on internal control effectivenessA. IncentiveB. OpportunityC. Character11. _____________ includes numbers for two or more time periods to make it easy for usersto compare account balances from one period to the next.12. What is the difference between a single-step income statement and a multistep income statement?13. What is the purpose of the multistep income statement?14. What is the largest expense on the income statement?15. What is the equation used to calculate gross profit?16. Fill in the missing account titles of the multistep income statement Net sales - ______= ______- Operating expenses= ______+/- Other Revenue and Expenses= ________- ________= Net Income17. What are you taxed on pretax income or net income?18. Using the following account balances prepare a multistep income statement on the back of this sheet.Sales Revenue $100,000Other Revenue $50,000Rent Expense $12,000COGS $60,000Wage Expense $15,000Depreciation Expense $10,000Other Operating Exp $12,000Interest Revenue $1000Interest Expense $500Income Tax Rate 30%19. ___ 1. Users of financial statements___ 2. Objective of financial statements___3. Consistency___4. Comparability___5. Separate Entity___6. Unit of Measure___7. Cost principle___8. Revenue principle___9. Matching Principle___10. ConservatismA. Counted unused supplies at the end of the period and valued them in US dollarsB. Valued an asset at the amount paid to acquire it, even through its market value has increase considerablyC. Analyzed the financial statements to assess the company’s performanceD. Established an accounting policy that sales revenue shall be recognized only when services have been provided to the customerE. Prepared and distributed financial statements that provide useful economic informationF. Established a policy not to include in the financial statements the personal financial affairs of the owners of the businessG. Changed the company’s year-end to correspond to that used by others in the industryH. Disclosed all relevant financial information about the business in the financial statementsI. Established a policy to report the company’s recurring business activities in the sameway from year to yearJ. Adjusted the rent accounts to show the cost of rent relating to the current periodK. Acquired a vehicle for use in the business, reporting it at the agree-upon purchase price rather than its higher sticker
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