Financial Planning II 3.05

Which agency oversees the entire auditing industry?

• Securities and Exchange Commission (SEC)

• Financial Accounting Standards Board (FASB)

• Association of International Accountants (AIA)

• Public Company Accounting Oversight Board (PCAOB)

What agency was created by the Sarbanes-Oxley Act to audit large publicly traded firms?

• FASB (Financial Accounting Standard Board)

• GAAP (General Accepted Accounting Principles)

• PCAOB (Public Company Accounting Oversight Board)

• SEC (Security and Exchange Commission)

What independent federal government agency is responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation?

• FASB

• GAAP

• PCAOB

• SEC

A commonly recognized set of accounting guidelines for financial reporting in the United States that is responsible for investor confidence in the American markets is the:

• Certified Accounting Practitioner (CAP)

• Securities and Exchange Commission (SEC)

• Financial Accounting Standards Board (FASB)

• Generally Accepted Accounting Principles (GAAP)

Which must be registered with the SEC before being eligible to be sold to investors?

• a position on the board of directors

• issues of securities offered in local offices

• the distribution of dividends to stockholders

• issues of securities offered in interstate commerce, through the mail, or on the Internet

The Sarbanes-Oxley Act of 2002 mandates that:

• CPAs take responsibility for the accuracy and completeness of corporate financial reports.

• boards of directors take responsibility for the accuracy and completeness of corporate financial reports.

• senior executives take individual responsibility for the accuracy and completeness of corporate financial reports.

• each business will determine who should take responsibility for the accuracy and completeness of corporate financial reports.

Which three reports are mandatory for every public company to file?

• income statement, balance sheet, and statement of cash flows

• income statement, balance sheet, and owner's equity statement

• income statement, cost of goods sold, and statement of cash flows

• balance sheet, owner's equity statement, and statement of cash flows

A nonprofit organization responsible for setting the accounting standards in the United States is the:

• AICPA

• FASB

• GAAP

• SEC

The main purpose of the Sarbanes-Oxley Act of 2002 is to:

• hold CPAs personally responsible for errors in accounting audits.

• hold CEOs personally responsible for errors in accounting audits.

• hold the boards of directors personally responsible for errors in accounting audits.

• allow each business to determine who will be personally responsible for errors in accounting audits.

The Sarbanes-Oxley Act of 2002 was created in response to:

• the Martha Stewart and Barclays scandals.

• the Enron, WorldCom, and Arthur Andersen scandals.

• the Madoff Ponzi scheme and the Bear Stearns Companies scandals.

• the Swissair, Adelphia Communications, and Global Crossing scandals.