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1) The Sarbanes-Oxley Act (SOX) requires managers and auditors of companies whose
stock is traded on an exchange to document and certify the system of internal controls.
What are some of the specific requirements?
2) What are estimated liabilities? Cite at least two examples and explain why they are
classified as estimated liabilities.
3) Indicate the financial statement on which each of the following items appears. Use I
for income statement, E for statement of owner's equity, and B for balance sheet.
4) Identify and discuss the key differences between common and preferred stock.
5) Discuss how the principles of internal control apply to cash receipts.
6) A company has 10%, 20-year bonds outstanding with a par value of $500,000. The
company calls the bonds at 96 when the unamortized discount is $24,500. Calculate the
gain or loss on the retirement of these bonds.
7) What is activity-based budgeting?
8) On October 1 of the current year a corporation sold, at par plus accrued interest,
$1,000,000 of its 12% bonds, which were dated July 1 of this year. What amount of
bond interest expense should the company report on its current year income statement?
