Acct Chapter 7 - Learning Objectives ● After studying...

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Learning Objectives After studying this chapter, you should be able to: OBJ 1 Describe the Sarbanes-Oxley Act and its impact on internal controls and financial reporting. Sarbanes-Oxley Act OBJ 2 Describe and illustrate the objectives and elements of internal control. Internal Control Objectives of Internal Control Elements of Internal Control Control Environment Example Exercise 7-1 Risk Assessment Example Exercise 7-1 Control Procedures Example Exercise 7-1 Monitoring Example Exercise 7-1 Information and Communication Example Exercise 7-1 Limitations of Internal Control OBJ 3 Describe and illustrate the application of internal controls to cash. Cash Controls Over Receipts and Payments Control of Cash Receipts Control of Cash Payments OBJ 4 Describe the nature of a bank account and its use in controlling cash. Bank Accounts Bank Statement Example Exercise 7-2 Using the Bank Statement as a Control Over Cash OBJ 5 Describe and illustrate the use of a bank reconciliation in controlling cash. Bank Reconciliation Example Exercise 7-3 OBJ 6 Describe the accounting for special-purpose cash funds. Special-Purpose Cash Funds Example Exercise 7-4 OBJ 7 Describe and illustrate the reporting of cash and cash equivalents in the financial statements. Financial Statement Reporting of Cash OBJ 8 Describe and illustrate the use of the ratio of cash to monthly cash expenses to assess the ability of a company to continue in business. Financial Analysis and Interpretation: Ratio of Cash to Monthly Cash Expenses Example Exercise 7-5
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7.1 Sarbanes-Oxley Act: An act passed by Congress to restore public confidence and trust in the financial statements of companies 7-2 Internal Control: The policies and procedures used to safeguard assets, ensure accurate business information, and ensure compliance with laws and regulations 7-2a Objectives of Internal Control Assets are safeguarded and used for business purposes.
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