What key piece of legislation was passed in response to corporate accounting scandals by Enron, WorldCom, and others?
A) Sarbanes-Oxley Act.
B) 1933 Securities Act.
C) 1934 Securities Exchange Act.
D) Regulation Fair Disclosure.
Answer: Sarbanes-Oxley Act.
Under the Sarbanes-Oxley Act, management is responsible for:
A) Analysts' having positive comments about the company's operations.
B) The reliability of financial statements.
C) Increasing the company's stock price.
D) All of the other answers represent management responsibilities under the Sarbanes-Oxley Act.
Answer: The reliability of financial statements.
The Sarbanes-Oxley Act requires that companies must:
A) Conduct customer surveys each year to ensure satisfaction with products and services.
B) Document internal controls and assess their effectiveness each year.
C) Pay taxes owed to the Internal Revenue Service by the tax filing date.
D) Devise a budget each year to ensure cash outflows are not greater than cash inflows.
Answer: Document internal controls and assess their effectiveness each year.
