Question

1.When it comes to mergers valuation is the only method used by organizations to assess the proper fit between two organizations.

	True
	False

2. The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board, whose purpose is to set auditing, quality control, and ethical standard; as well as, inspect accounting firms’ audit operations & investigate an impose sanctions for violations.

	True
	False

3. According to the Sarbanes-Oxley Act, public companies need to adopt a corporate code of ethics for middle managers.

	True
	Fals

4. Agency theory provides a simplified view of the corporation, and as a result, this view is problematic; and, a robust view of the corporation, which is more inclusive of all stakeholders.

	True
	False

5. Accountants focus only on internal stakeholders.

	True
	False

Answer 1

Ans 1 : True.

In a mergers and acquisitions transaction, when valuing a company's P/E Ratio, it is most useful to compare to the ratios of companies in the same industry, or against the company's historical P/E Ratio. The P/E Ratio also signals how much investors are willing to pay per dollar of earnings.

Ans 2 : True.

The PCAOB's responsibilities include the following:

• registering public accounting firms;
• establishing auditing, quality control, ethics, independence, and other standards relating to public company audits;
• conducting inspections, investigations, and disciplinary proceedings of registered accounting firms; and
• enforcing compliance with Sarbanes-Oxley.

Ans 3 : True.

Ans 4 : True.

Ans 5 :False. Accountants focus on both internal and external stakeholders.

Internal stakeholders are entities within a business (e.g., employees, managers, the board of directors, investors). External stakeholders are entities not within a business itself but who care about or are affected by its performance (e.g., consumers, regulators, investors, suppliers).