In Response to Accounting Scandals in 2002,the Federal Government Passed

question 227

Multiple Choice

In response to accounting scandals in 2002,the federal government passed legislation requiring,among other things,that auditors disclose any potential conflicts of interest.What is the name of this legislation?

• A)the Accountant Reliability Act
• B)the 24th amendment to the Constitution
• C)the Kennedy-Lott Act
• D)the Sarbanes-Oxley Act

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the operating cycle.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.

Current Ratio

A financial metric that compares a company's current assets to its current liabilities, indicating liquidity levels.

Equity (Leverage)

The amount of funds contributed by owners (shareholders) plus the retained earnings (or losses). It can also refer to the use of debt to acquire additional assets.