The Securities and Exchange Commission

This week's discussion is centered on the Real-World Focus presented in CT 17.4.

Public companies have to file their annual reports to the Securities and Exchange Commission (SEC). There are rules that companies are required to follow. Domestic issuers must submit annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Please review the Real-World Focus in your text and answer the following questions.

• How many enforcement actions does the SEC take each year against securities law violators? What are the typical infractions?
• After the Great Depression, Congress passed the Securities Acts of 1933 and 1934 to improve investor confidence in the markets. What two common sense notions are these laws based on?

Who was the President of the United States at the time of the creation of the SEC? Who was the first SEC chairperson? Who is the current SEC chairperson?

Return to Unit 10 Discussion Instructions

Comparative Balance Sheets December 31 Assets 2022 2021 Change in Account Balance Increase/ Decrease Current assets $ 55,000 20,000 15,000 5,000 $ 33,000 30,000 10,000 1,000 $ 22,000 Increase 10,000 Decrease 5,000 Increase 4,000 Increase Cash Accounts receivable Inventory Prepaid expenses Property, plant, and equipment Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Liabilities and Stockholders' Equity Current lizhilities 130,000 20,000 160,000 40,000 (11,000) (5,000) 27,000 10,000 (3,000) (1,000) $398,000 $ 138,000 110,000 Increase 120,000 Increase 6,000 Increase 17,000 Increase 2,000 Increase Total assets $ 138,000 $ 12,000 8,000 $398,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 28,000 Income taxes payable 6,000 Long-term liabilities Bonds payable 130,000 Stockholders' equity Common stock 70,000 Retained earnings 164,000 Total liabilities and stockholders' equity $398,000 $ 16,000 Increase 2,000 Decrease 110,000 Increase 20,000 50,000 48,000 $138,000 20,000 Increase 116,000 Increase Computer Services Company Income Statement For the Year Ended December 31, 2022 $507,000 $150,000 Sales revenue Cost of goods sold Operating expenses (excluding depreciation) Depreciation expense Loss on disposal of plant assets 111,000 9,000 3,000 Income before income tax Income tax expense Net income 192,000 47,000 $145,000 Additional information for 2022: 1. Depreciation expense was comprised of $6,000 for building and $3,000 for equipment. 2. The company sold equipment with a book value of $7,000 (cost $8,000, less accumulated depreciation $1,000) for $4,000 cash. 3. Issued $110,000 of long-term bonds in direct exchange for land. 4. A building costing $120,000 was purchased for cash. Equipment costing $25,000 was also purchased for cash. 5. Issued common stock at par for $20,000 cash. 6. The company declared and paid a $29,000 cash dividend. We now apply the three steps for preparing a statement of cash flows to the information provided for Computer Services Company. Step 1: Operating Activities Determine Net Cash Provided/Used by Operating Activities by Convertina Net Income from an Accrual Basis