CAA Financial Management & Ethics Flashcards
6 cards from real CAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAA Financial Management & Ethics flashcards as text
Under the Sarbanes-Oxley Act (SOX) Section 404, management must:
Answer: Assess and report on the effectiveness of internal controls over financial reporting
SOX Section 404 requires management to assess the effectiveness of internal controls over financial reporting and have auditors attest to that assessment.
The concept of 'independence in appearance' for an accountant means:
Answer: Third parties must perceive the accountant as unbiased and objective
Independence in appearance requires that a reasonable, informed observer would conclude that the accountant is free from any bias or conflict of interest.
Which working capital management strategy typically reduces cash conversion cycle the most?
Answer: All of the above combined
The cash conversion cycle = Days in inventory + Days receivable outstanding − Days payable outstanding; reducing all three components has the greatest combined impact.
A company has a debt-to-equity ratio of 2:1. This means:
Answer: The company has $2 of debt for every $1 of equity
A debt-to-equity ratio of 2:1 means the company has two dollars of debt for every one dollar of equity in its capital structure.
Which ethical framework focuses on maximizing overall welfare or 'the greatest good for the greatest number'?
Answer: Utilitarian ethics
Utilitarian ethics judges actions by their outcomes, seeking to maximize total well-being across all affected parties.
Net present value (NPV) is considered superior to payback period because NPV:
Answer: Considers the time value of money and all project cash flows
NPV accounts for the time value of money by discounting all future cash flows, making it a more theoretically sound investment criterion than payback period.