The Accounting Scandals of the Early 2000s Led Many People

question 360

Multiple Choice

The accounting scandals of the early 2000s led many people to question the legitimacy of

• A) ratio analysis as a means of evaluating the performance of a firm.
• B) the five-member Public Company Accounting Oversight Board (PCAOB) under the Securities and Exchange Commission (SEC) that had been created to oversee the accounting industry.
• C) publishing financial information about a firm on the Internet.
• D) allowing an accounting firm to do both consulting and auditing work for the same company.

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Definitions:

Break-even Point

The financial point at which total revenue equals total costs, resulting in zero net profit or loss.

Break-even Analysis

A financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue.

Cost-volume-profit Analysis

A financial analysis tool that helps in determining the effect of changes in costs and volume on a company's profit.

PERT

An acronym for Program Evaluation and Review Technique, a statistical tool used in project management, designed to analyze and represent the tasks involved in completing a given project.