ACC 290 Week 5

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Week 5 DQ1

What is the control environment? How does the control environment affect a company’s internal controls? What are the negative and positive elements of a control environment?  What are two examples of strong and weak internal controls in organizations where you have worked or have first-hand knowledge?

 

Week 5 DQ2

How would you describe the key internal controls that should be in place to protect cash in a cash rich environment such as a merchandiser?

 

 

Week 5 DQ3

What is the Sarbanes-Oxley Act of 2002? Why did it come about?  How have the new rules in the Sarbanes-Oxley Act of 2002 affected the way accounting departments and companies operate? What are some positive outcomes from these changes?

ACC 290 Week 5 Individual Assignment Week Five Exercises 

 

ACC 290 Week 5 Learning Team Assignment Financial Reporting Problem, Part 2

 

ACC 290 Week 5 Learning Team Reflection Summary

 

 

ACC 290 Week 5 Summary

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Description

ACC 290 Week 5,

1-

The control environment is the basis of the entire control system that the organization is establishing. The control environment is the value that is placed on integrity and the knowledge that unethical activity will not be tolerated. It is management’s responsibility to express behavior and attitude that enforces this ethical behavior. The control environment affects the internal control by setting a basis of control activities that safeguard assets, enhance accounting reliability, increase

2-

The controls that should be in place to protect a merchandiser in a cash rich environment are –

Establishment of responsibility

Segregation of duties

Documentation procedures

Physical controls

Independent internal verification

 

3-

The Sarbanes-Oxley Act (SOX) requires that all publicly traded U.S. corporations are required to sustain a satisfactory structure of internal controls. In addition to internal controls each organization must be able to confirm their compliance by an independent outside audit. SOX came about because of public outrage to lack of corporate integrity and accounting dishonesty. Major corporations such as Enron and WorldCom were dishonestly reporting accounting figures to investors and such dishonesty led to the major losses in investor’s money. SOX requirements have improved

 

Assignment

BE5-1

  1. Sales: $181,500
  2. Cost of goods sold: $41,200
  3. Gross profit: $38,000
  4. Operating expenses: $17,900
  5. Operating expenses: $8,500
  6. Net income: $63,400

Next Problems Included as well

 

Financial Reporting Problem, Part II

PepsiCo is a highly known beverage distributor.  The cola started in the late 1800s in a drugstore, and its original name was “Brad’s Drink.”  In 1898, cola introduced “Brad’s Drink” to the market.  Then, later change the name to Pepsi.  It is a large company that has numerous assets and liabilities.  Many investors and creditors would be willing to work with this company because they run a good business.

Currents assets are very significant to companies like PepsiCo.  In the balance sheet, “current assets are assets that a company expects to convert to cash or use up within one year or its operating cycle, whichever is longer.  For most businesses, the cut off for classification as current assets is one year from the balance sheet date” (Kimmel, Weygandt, & Kieso, 2011, p. 49).   The company can use these assets to support its routine operations.  For example, the company can use the assets to pay their current expenses.

The common type of current assets consist of cash, marketable securities, inventory,

 

Week Five Reflection Summary

The team members’ knowledge continues to grow.  Week five mainly covered the effect of the Sa Sarbanes-Oxley Act of 2002 on internal controls.

The Sarbanes-Oxley Act of 2002 was put into place because of shady accounting practices.  One of the biggest accounting scandals was the Enron scandal in 2001.  Enron was

 

Week summary attached as well !!!

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