Refer to the Wiki Art Gallery (WAG) instructional case in Appendix D and read the case in sufficient depth to answer the following questions.

1. Is there any evidence that Rob failed to follow generally accepted accounting principles when preparing WAG’s 2011 and 2010 financial statements?

a. Yes, dividends should have increased rather than decreased from 2010 to 2011.

b. Yes, as a public company, WAG is required to report its price/earnings ratio.

c. Yes, dividends should not be reported on the income statement.

d. No, there were no violations of generally accepted accounting principles.

2. Stephen and Rob agreed to base their agreement on an “earnings multiplier.” Which of the following is an alternative name for this concept?

a. Earnings per share (EPS) ratio

b. Return on equity (ROE) ratio

c. Price/earnings (P/E) ratio

d. None of the above