FIN 326 TEST QUESTIONS AND
ANSWERS ALL CORRECT
What is arbitrage? - Answer- The practice of buying and selling equivalent goods to take
advantage of a price difference.
What is an arbitrage opportunity? - Answer- Any situation in which it is possible to make
a profit without taking any risk or making any investment.
What infamous financial fraud is associated with financial reporting abuses? - Answer-
Enron
What does GAAP stand for? - Answer- Generally Accepted Accounting Principles.
What is the purpose of auditors in financial reporting? - Answer- To provide an
independent assessment of the accuracy of financial statements.
What is the significance of the Sarbanes-Oxley Act in relation to penalties? - Answer- It
stiffens penalties for providing false information in financial reporting.
What does the Dodd-Frank Act require the SEC to study? - Answer- How to reduce
costs for medium-sized firms with a public float of less than $250 million.
What is a key safeguard in financial reporting? - Answer- GAAP and the role of auditors.
What is the main goal of internal financial control processes? - Answer- To ensure the
accuracy and reliability of financial reporting.
How does the Dodd-Frank Act broaden whistle-blower provisions? - Answer- By
enhancing protections and incentives for individuals reporting violations.
What is the relationship between competitive markets and pricing? - Answer- There can
be only one competitive price for a good due to market forces.
What is the role of financial ratios in financial analysis? - Answer- To assess the
financial health and performance of a company.
What is the significance of the year 2017 in the context of financial ratios? - Answer- It is
the year referenced for averages in the financial ratios summary.
ANSWERS ALL CORRECT
What is arbitrage? - Answer- The practice of buying and selling equivalent goods to take
advantage of a price difference.
What is an arbitrage opportunity? - Answer- Any situation in which it is possible to make
a profit without taking any risk or making any investment.
What infamous financial fraud is associated with financial reporting abuses? - Answer-
Enron
What does GAAP stand for? - Answer- Generally Accepted Accounting Principles.
What is the purpose of auditors in financial reporting? - Answer- To provide an
independent assessment of the accuracy of financial statements.
What is the significance of the Sarbanes-Oxley Act in relation to penalties? - Answer- It
stiffens penalties for providing false information in financial reporting.
What does the Dodd-Frank Act require the SEC to study? - Answer- How to reduce
costs for medium-sized firms with a public float of less than $250 million.
What is a key safeguard in financial reporting? - Answer- GAAP and the role of auditors.
What is the main goal of internal financial control processes? - Answer- To ensure the
accuracy and reliability of financial reporting.
How does the Dodd-Frank Act broaden whistle-blower provisions? - Answer- By
enhancing protections and incentives for individuals reporting violations.
What is the relationship between competitive markets and pricing? - Answer- There can
be only one competitive price for a good due to market forces.
What is the role of financial ratios in financial analysis? - Answer- To assess the
financial health and performance of a company.
What is the significance of the year 2017 in the context of financial ratios? - Answer- It is
the year referenced for averages in the financial ratios summary.
