The Primary Purpose of the Sarbanes Oxley Act of 2002

question 53

Multiple Choice

The primary purpose of the Sarbanes Oxley Act of 2002 was to:

• A)protect investors from corporate abuses.
• B)apply restrictions on foreign firms operating in the U.S.
• C)protect financial managers from investors.
• D)decrease audit costs for U.S.firms.
• E)reduce corporate revenues.

Acknowledge the impact of a project on other parts of the company and the treatment of related expenses.

Comprehend the principles of incremental cash flow analysis in capital budgeting decisions.

Realize the role of sunk costs and their irrelevance to future cash flow estimations.

Understand the concept and implications of sunk costs in capital budgeting decisions.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct labor and materials costs.

Incremental Sales

Additional revenues generated from a new marketing campaign, sales strategy, or any activity beyond normal operations.

Operating Expenses

Expenses related to the day-to-day operations of a business that are not included in the cost of goods sold, such as rent, salaries, and utilities.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects or assets, evaluating potential returns and risks.