Please answer the following questions writing between 200 to 300 words to each questions (ONLY QUESTION 4 NEEDS TO HAVE BETWEEN 250 TO 300 WORDS):
1. What are the three internal control objectives for financial reporting?
2. Describe the basic principles of cash management. Have you had any good or bad experience with companies' cash management?
3. What is the main distinction between perpetual and periodic inventory systems? Which type of system provides better internal control over inventory? Explain why.
4. What type of information does managerial accounting provide?
1. The three primary objectives of internal controls for financial reporting are to comply with laws and regulations, to ensure the reliability of the information being reported, and to provide numbers with which to compare previously determined benchmarks in an effort to determine the amount of progress made toward strategic objectives.
Internal controls for financial reporting ensure that laws and regulations (such as those associated with Sarbanes-Oxley following the collapse of Enron and Worldcom, and others) are followed and that penalties and fines are not levied against the firm.
The internal controls also ensure that the information being reported is reliable. This is important as external users such as investors rely on the information being accurate and make important financial decisions. These users may not always have the time to pour over every number to look for mistakes, so they rely on the fact that the numbers presented are reliable.
Another objective is for the purpose of benchmarking. Firms set strategic objectives at the beginning of a specific term and use the numbers they report to check to see if these objectives were met. For example, a firm may set a goal to have increase its acid ratio to 1.5 by the end of the quarter. The firm would work hard to increase its cash position or use some other method and would check its progress against the balance sheet at the end of the term.
2. The basic principals of cash management include keeping just enough cash around for paying short term liabilities but a small enough amount that ...
The solution explains three internal control objectives of financial reporting, basic principles of cash management, perpetual and periodic inventory systems, and managerial accounting.