Test 3 MC
A letter of comments would be issued by the SEC A. to request clarification of a registration statement. B. to convey your pertinent comments to the SEC. C. in response to a company's filing of Form 8-K. D. after receiving the company's Form 10-K. E. to indicate that a registration statement has been approved.
A
All of the following are required to be reported in interim financial statements for a material operating segment except: A. Segment assets. B. Segment revenues from external customers. C. Intersegment revenues. D. Segment profit or loss. E. Reconciliation of segment profit or loss to total income before taxes.
A
How should revenues be recognized in interim periods? A. In the same way as they are recognized on an annual basis. B. On the cash basis. C. On an annualized basis. D. On a seasonal basis. E. There are no revenues recognized in interim periods.
A
Lechter Co. is preparing to issue stock. Its revenues for last year were $85,000,000, and it had $52,000,000 in stock held by nonaffiliates. The company had been filing with the SEC for eight years. Which one of the following forms should have been used for registration? A. S-1. B. S-3. C. S-4. D. S-8. E. S-11.
A
The SEC's role in the initial registration of securities to be publicly issued is: A. to ensure that the content of the registration filing is in compliance with securities regulations. B. to ensure that securities issued are quality investments. C. to provide data to the public regarding first-time issuance of securities. D. to give permission to an independent CPA firm to audit the registrant's financial statements. E. to make the registrant's annual report available for public viewing.
A
The advantages of the partnership form of business organization, compared to corporations, include A. single taxation. B. ease of raising capital. C. mutual agency. D. limited liability. E. difficulty of formation.
A
The following items are required to be disclosed for each operating segment except: A. Factors used to allocate company-wide pension expense. B. Revenues from transactions with other operating segments. C. Interest revenue and interest expense. D. Depreciation, depletion, and amortization expense. E. Revenues from external customers.
A
Which information is not contained in the prospectus of the registration statement? A. financial statements reviewed by an independent CPA. B. an explanation of the intended use of the proceeds. C. a description of the risks associated with the securities. D. a description of the business of the registrant. E. a description of the properties of the registrant.
A
Which of the following is a criterion for determining whether an operating segment is separately reportable? A. An operating segment's assets are 10 percent or more of combined segment assets. B. An operating segment's assets are 10 percent or more of consolidated assets. C. An operating segment's assets are 10 percent or more of combined segment liabilities. D. An operating segment's assets are 10 percent or more of consolidated liabilities. E. An operating segment's assets are 10 percent or more of corporate assets.
A
Which of the following is not a security as defined by the SEC? A. Accounts receivable. B. Notes receivable. C. Treasury stock. D. Debenture. E. Investment contract.
A
Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar? A. The geographical location of the operations. B. The nature of the production process. C. The distribution methods. D. The nature of the regulatory environment, if applicable. E. The type or class of customer.
A
Which of the following is reported for interim financial reports using the integral approach? A. Bonus expense. B. Extraordinary losses. C. Cash basis accounting. D. Extraordinary gains. E. Change in accounting principle
A
Which of the following securities offerings is not exempt from registration prior to their sale? A. Offerings of more than $5 million. B. Securities issued by governments. C. Securities issued by banks. D. Securities issued by savings and loan associations. E. Offerings of no more than $1 million made to any number of investors within a 12-month period.
A
Which of the following statements is true concerning the distribution of safe payments? A.The distribution of safe payments assumes that any capital deficit balances will prove to be a total loss to the partnership. B. Safe payments are equal to the recorded capital balances of partners with positive capital balances. C. The distribution of safe payments may only be made after all liabilities have been paid. D In computing safe payments, partners with positive capital balances are assumed to absorb an equal . share of any deficit balance(s). E. There are no safe payments until the liquidation is complete.
A
Which of the following would be an acceptable grouping for a U.S. company to provide information by geographic area? A. United States, All Other Countries. B. United States, Europe, Taiwan. C. United States, Asia, Germany. D. United States, Central America, Mexico, Germany. E. South America, Spain, All Other Countries.
A
Which one of the following forms is used in connection with employee stock plans? A. S-8. B. S-3. C. S-4. D. S-1. E. S-11.
A
Which one of the following forms is used when companies have filed with the SEC for less than 36 months but are not large enough to file form S-3? A. S-1. B. S-4. C. S-11. D. S-8. E. S-3.
A
Which one of the following regulates the initial offering of securities by a company or underwriter? A. The Securities Act of 1933. B. The Securities Exchange Act of 1934. C. The Investment Company Act of 1940. D. The Investment Advisers Act of 1940. E. The Sarbanes-Oxley Act of 2002.
A
What is private placement of securities? A.A procedure that allows a company to register securities and then sell them over a period of two years without reregistering. B A procedure that allows the sale of securities to a small group of sophisticated knowledgeable . investors, without any general solicitation. C. A method of filing Form 10-K with the SEC. D. the registration of mutual funds that engage in investing and trading securities. E. A sale of securities to 35 or fewer accredited investors.
B
What is shelf registration? A.A procedure that allows the sale of securities to a small group of knowledgeable investors without any general solicitation. B.A procedure that allows a company to register securities and then sell them over a period of two years without reregistering. C. A method of filing Form 10-K with the SEC. D. The registration of mutual funds that engage in investing and trading securities. E. The registration of securities issued in connection with business combination transactions.
B
Which of the following statements is false concerning the number of operating segments that should be disclosed? A. At least 75 percent of total company sales made to outsiders should be presented. B. Even though an operating segment has been reportable in the past and is of continuing significance, it. must meet at least one of the three reporting tests to report separately in the current year. C If the 75 percent rule is not met by the results of applying all three reporting tests, additional segments. must be disclosed separately despite their failure to satisfy even one of the three quantitative thresholds. D. If an operating segment qualifies for disclosure in the current year, prior period segment data presented . for comparative purposes must be restated to reflect the newly reportable segment as a separate segment. E. The practical limit to the number of operating segments is 10.
B
Which of the following statements is false concerning the partnership Schedule of Liquidation? A. Liquidations may take a considerable length of time to complete. B. Frequent reporting by the accountant is rarely necessary. C. The Schedule of Liquidation provides a listing of transactions to date, current cash, and capital balances. D.The Schedule of Liquidation provides a listing of property still held by the partnership as well as liabilities remaining unpaid. E. The Schedule of Liquidation keeps creditors and partners apprised of the results of the process of dissolution.
B
Which one of the following registration statement forms is used by large issuers that already have at least $75 million voting stock held by nonaffiliates? A. S-11. B. S-3. C. S-8. D. S-4. E. S-1.
B
Which one of the following regulates the subsequent trading of securities through brokers and exchanges? A. The Securities Act of 1933. B. The Securities Exchange Act of 1934. C. The Investment Company Act of 1940. D. The Investment Advisers Act of 1940. E. The Sarbanes-Oxley Act of 2002.
B
Which statement is false regarding the registration of public accounting firms with the PCAOB under the Sarbanes-Oxley Act? A Registration is required of all U.S. firms that prepare, issue, or participate in the preparation of an audit . report for an entity that issues securities. B. Foreign accounting firms are exempt from registration. C. Disclosure requirements include annual fees received from each issuer for the firm's audit and nonaudit services. D. The Public Company Accounting Oversight Board subjects registered firms to periodic inspections. E. Information regarding disagreements between the issuer and the audit firm during the previous year must be disclosed.
B
Which tests must a company use to determine which operating segments require separate disclosure? A. Revenue test and asset test. B. Revenue test, profit or loss test, and asset test. C. Revenue test and profit or loss test. D. Profit or loss test and asset test. E. Revenue test, asset test, and liability test.
B
Filings with the SEC are divided generally into two broad categories: A. Registration statements and perpetual filings. B. Reconciliation statements and periodic filings. C. Registration statements and periodic filings. D. Registration filings and reconciliation statements. E. Reconciliation filings and perpetual filings.
C
Generally accepted accounting principles require a U.S. corporation to disclose the following disaggregated information for each operating segment, except: A. Revenues from external customers. B. Discontinued operations. C. Cost of goods sold. D. Depreciation expense. E. Intersegment revenues.
C
How should seasonal revenues be reported in an interim financial statement? A The seasonal nature should be disclosed, and a pro forma report for the next 12-month period should . supplement the interim report. B. The seasonal nature should be disclosed but no other reports should accompany the interim report. C The seasonal nature should be disclosed, and a supplemental report for the 12-month period ended at. the interim date should supplement the interim report. D. The financial statements should be adjusted to reflect the assumption that no seasonal revenues could be earned. E. Seasonal revenues have no particular reporting requirement.
C
Partnerships have alternative legal forms including all of the following except: A. General Partnership. B. Limited Partnership. C. Subchapter S Partnership. D. Limited Liability Partnership. E. Limited Liability Company.
C
Vapor Corporation has a fan products operating segment. Which of the following items does Vapor not have to report for this segment? A. Depreciation expense. B. Amortization expense. C. Research and development expense. D. Interest expense. E. Interest income.
C
What information is required in proxy statements? (1) Five-year summary of operations. (2) Five-year summary of industry segments. (3) Listing of company directors and executive officers. (4) Management discussion and analysis (MD&A). A. 1,2and3. B. 2,3and4. C. 1,3and4. D. 1,2and4. E. 1, 2, 3, and 4.
C
What is the appropriate treatment in an interim financial report for inventory that has market value below cost? A. The loss should always be recorded in the interim period in which market value drops below cost. B.The loss should be recorded in the interim period in which market value drops below cost if the loss is considered temporary. C.The loss should be recorded in the interim period in which market value drops below cost if the loss is considered permanent. D. The loss should be ignored for interim reporting purposes. E. There is no loss to report.
C
When a partnership is insolvent and a partner has a deficit capital balance, that partner is legally required to: A. declare personal bankruptcy. B. initiate legal proceedings against the partnership. C. contribute cash to the partnership. D. deliver a note payable to the partnership with specific payment terms. E. None of the above. The partner has no legal responsibility to cover the capital deficit balance.
C
When defining a reportable segment, which of the following conditions would be sufficient to allow a company to combine two operating segments for purposes of testing? A. The products sold by each segment are produced in the same plant. B. Both segments have several customers in common. C. The segments may sell different products, but they have a similar production process. D. Both segments are required to adhere to U.S. Department of Labor regulations regarding immigration laws. E. Both segments are owned by the same parent company.
C
When must Form 8-K be filed with the SEC? A. Within forty-five days of the end of any quarter other than the fourth quarter of the fiscal year. B. Within ninety days of the end of the fiscal year. C. Within fifteen days of the occurrence of certain significant events. D. Within sixty days of the end of the fiscal year. E. When a relatively small company intends to issue securities.
C
Which of the following are issued by the SEC, as needed, to supplement Regulation S-X and Regulation S-K? A. SABs. B. ASRs. C. FRRs. D. ARBs. E. SRBs.
C
Which of the following is not a required disclosure in an interim financial report? A. Net income. B. Earnings per share. C. Gross profit. D. Significant changes in estimates or provisions for income taxes. E. Disposal of a segment, net of income taxes.
C
Which of the following statements is correct regarding the admission of a new partner? A. A new partner must purchase a partnership interest directly from the business. B The right of co-ownership in the business property can be transferred to a new partner without the . consent of other existing partners. C. The right to participate in management of the business can be conveyed without the consent of other existing partners. D. The right to share in profits and losses can be sold to a new partner without the consent of other existing partners. E. A new partner always pays book value.
C
Which one of the following is not a characteristic of the Public Company Accounting Oversight Board? A. Minimizes self-regulation in the accounting profession. B. Has the authority to amend, modify, repeal, or reject any audit standard of the ASB. C. Only one member can be an accountant, past or present. D. SEC has oversight and enforcement authority over the Board. E. Enforces auditing, quality control, and independence standards and rules.
C
Which one of the following is not a division of the SEC? A. The Division of Corporation Finance. B. The Division of Investment Management. C. The Division of Compliance Information. D. The Division of Enforcement. E. The Division of Trading and Markets.
C
Which one of the following is not a prescribed event for the filing of Form 8-K? A. Bankruptcy or receivership. B. Changes in control of the registrant. C. Resignation of a middle manager. D. Changes in the registrant's independent auditor. E. Acquisitions or dispositions of assets.
C
Which one of the following requires the registration of mutual funds that engage in investing and trading in securities? A. The Securities Act of 1933. B. The Securities Exchange Act of 1934. C. The Investment Company Act of 1940. D. The Foreign Corrupt Practices Act of 1977. E. The Sarbanes-Oxley Act of 2002.
C
Which statement is false regarding the Public Company Accounting Oversight Board (PCAOB)? A. Regulates audit standards and independent audit firms. B. Has five members appointed by the SEC. C. Allows all members to be accountants, past or present. D. is under the oversight and enforcement of the SEC. E. is funded by fees levied on all publicly traded companies.
C
Withdrawals from the partnership capital accounts are typically not used A. to reward partners for work performed in the business. B. to reduce the partners' capital account balances at the end of an accounting period. C. to record interest earned on a partner's capital balance. D. to reduce the basic investment that has been made in the business. E. to record the partnership's payment of a partner's personal expense such as income tax.
C
According to U.S. GAAP, which of the following would be an acceptable grouping by a U.S. company for presentation of information by geographic area? A. France, Germany, All Other Countries. B. United States, Europe, Canada. C. United States, Africa, Europe, Asia. D. United States, Canada, Mexico, Germany. E. North America, Spain, All Other Countries.
D
Audited financial statements in an annual report of an issuer that is subject to SEC regulation must include: A. three balance sheets, three income statements, and three statements of cash flows. B. three balance sheets, two income statements, and two statements of cash flows. C. one balance sheet, one income statement, and one statement of cash flows. D. two balance sheets, three income statements, and three statements of cash flows. E. two balance sheets, two income statements, and two statements of cash flows.
D
How are extraordinary gains reported in a third quarter interim financial report? A. Recognized at year-end only. B. Recognized in the first quarter. C. Recognized ratably over the first three quarters. D. Recognized in the third quarter. E. Ignored.
D
How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement? A Retrospectively restate the first-quarter income statement, net of income taxes, as though the change . occurred at the beginning of the year. B. Postpone recording of the change to the annual income statement. C. Record the change in the third-quarter income statement, net of income taxes. D.Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods. E. These changes are prohibited by GAAP.
D
Regulation S-X specifies: A. requirements for the nonfinancial information to be filed with the SEC. B. which form a company must file to register new securities. C. that the financial statements included in a company's annual report must be audited. D. the form and content of financial statements to be filed with the SEC. E. the internal controls a publicly traded company must maintain.
D
The SEC has usually restricted its role in establishing accounting principles to A. specifying the information that should be included in interim financial statements. B. developing definitions of key accounting terms. C. developing accounting standards for particular industries. D. determining required disclosures. E. the promulgation and issuance of SASs (Securities Accounting Standards).
D
The partnership of Clapton, Seidel, and Thomas was insolvent and will be unable to pay $30,000 in liabilities currently due. What recourse was available to the partnership's creditors? A. they must present equal claims to the three partners as individuals. B. they must try obtain a payment from the partner with the largest capital account balance. C. they cannot seek remuneration from the partners as individuals. D. they may seek remuneration from any partner they choose. E. they must present their claims to the three partners in the order of the partners' capital account balances.
D
What accounting transactions are not recorded by an accountant during partnership liquidation? A. The conversion of partnership assets into cash. B. The allocation of gains and losses from sales of assets. C. The payment of liabilities and expenses. D. The initiation of legal action by creditors of the partnership. E. Writeoff of remaining unpaid debts.
D
What are the two approaches that can be followed in preparing interim reports? A. Indiscrete and terminal. B. Discrete and terminal. C. Metric and integral. D. Discrete and integral. E. Discrete and metric.
D
What information needs to be included in Form 10-Q? 1. Income statements for the most recent quarter and for the year to date as well as for the comparative periods in the previous year. 2. Income statements for the most recent quarter and for the year to date as well as for the comparative periods in the previous two years. 3. A statement of cash flows is mandatory, but only for the year to date as well as for the corresponding period in the preceding year. 4. Two balance sheets: one for the end of the most recent quarter and one showing the company's financial position at the end of the previous fiscal year. A. 1 and 3. B. 2, 3, and 4. C. 1 and 2. D. 1, 3, and 4. E. 2 and 4.
D
What is the minimum net worth of those who are considered accredited investors? A. $200,000. B. $400,000. C. $500,000. D. $1,000,000. E. $2,000,000.
D
What is the preferred method of resolving a partner's deficit balance, according to the Uniform Partnership Act? A. Partners never have a deficit balance. B. The other partners must contribute personal assets to cover the deficit balance. C. The partnership must sell assets in order to cover the deficit balance. D. The partner with a deficit balance must contribute personal assets to cover the deficit balance. E. The partner with a deficit balance contributes personal assets only if those personal assets exceed personal liabilities.
D
Which item is not shown on the schedule of partnership liquidation? A. Current cash balances. B. Property owned by the partnership. C. Liabilities still to be paid. D. Personal assets of the partners. E. Current capital balances of the partners.
D
Which of the following is not a characteristic of a partnership? A. The partnership itself pays no income taxes. B. It is easy to form a partnership. C. Any partner can be held personally liable for all debts of the business. D. A partnership requires written Articles of Partnership. E. Each partner has the power to obligate the partnership for liabilities.
D
Which of the following is not a required disclosure in an interim financial report? A. Sales or gross revenues. B. Provision for income taxes. C. Extraordinary items. D. Gains on sales of major equipment. E. Earnings per share
D
Which of the following is not correct regarding inventory procedures reported in an interim financial statement? A. LIFO liquidations expected to be replaced by the end of the year are accounted for in cost of goods sold . at expected replacement cost rather than original LIFO cost. B.Lower-of-cost-or-market adjustments are not made for the interim period if they are expected to reverse by the end of the year. C Variances in a standard costing system are reported at the end of the interim period unless they are . expected to be absorbed by year-end. D. FIFO is remeasured using the LIFO method in an interim financial statement. E.LIFO liquidations not expected to be replaced by the end of the year are reflected in cost of goods sold at original LIFO cost.
D
Which of the following must be disclosed by a geographic segment according to U.S. GAAP? A. Operating profit or loss. B. Gross profit. C. Total assets. D. Revenues from external customers. E. Revenues from internal customers.
D
Which of the following statements is true regarding the determination of operating segments in order to decide which segments will be separately reported? A.An operating segment is a component of an enterprise that engages in business activities from which it only earns revenues. B.The operating results of an operating segment are reviewed regularly by the corporate controller to assess performance. C. There is integral financial information available for each operating segment. D.An organizational unit can be an operating segment if all of its revenues or expenses result from transactions with other segments. E. All parts of a company must be included in some operating segment.
D
Which of the following statements is true? A. In determining reportable segments, two tests are applied and both must be met.B. In determining reportable segments, three tests are applied and all three must be met.C. In determining reportable segments, two tests are applied and only one must be met.D. In determining reportable segments, three tests are applied and only one must be met.E. In determining reportable segments, at least 80% of the revenues from external customers must be reported.
D
Which one of the following forms is used in connection with registration of securities of a small reporting company with $25 million of annual revenues and of $25 million of voting securities held by nonaffiliates? A. S-8. B. S-11. C. S-4. D. S-1 E. S-3.
D
Which one of the following items is not required to be disclosed for each operating segment? A. Factors used to identify operating segments. B. Products and services from which each segment derives its revenues. C. Revenues from external customers. D. Factors used to allocate company-wide expenses. E. Revenues from transactions with other operating segments.
D
Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I.) Revenue from external customers.(II.) Total Segment Assets (III.) Revenues from foreign customers, identified by country. A. I, II, and III B. I and III only C. II and III only D. I and II only E. There is no requirement of information to disclose for operating segments
D
Which one of the following requires the maintenance of accounting records and adequate internal accounting controls? A. The Securities Act of 1933. B. The Securities Exchange Act of 1934. C. The Investment Company Act of 1940. D. The Foreign Corrupt Practices Act of 1977. E. The Sarbanes-Oxley Act of 2002.
D
The dissolution of a partnership occurs A. only when the partnership sells its assets and permanently closes its books. B. only when a partner leaves the partnership. C. at the end of each year, when income is allocated to the partners. D. only when a new partner is admitted to the partnership. E. when there is any change in the individuals who make up the partnership
E
The prospectus part of a registration contains all except which of the following? A.Financial statements for the issuing company audited by an independent CPA along with appropriate supplementary data. B. An explanation of the intended use of the proceeds to be generated by the sale of the new securities. C. A description of the risks associated with the securities. D. A description of the business and the properties owned by the company. E. Additional data concerning expenses of issuance.
E
What is the primary focus of the Sarbanes-Oxley Act? A. Accounting standards and the registration of securities. B. Regulation of the continuous reporting by publicly owned companies. C. Accounting standards and registration of investment companies that engage in investing and trading in securities. D. Accounting standards and penalties against persons who profit from illegal use of inside information. E. Regulation of independent audit firms and audit standards.
E
When the hybrid method is used to record the withdrawal of a partner, the partnership A. revalues assets and liabilities and records goodwill to the continuing partner but not to the withdrawing partner. B. revalues liabilities but not assets, and no goodwill is recorded. C. can recognize goodwill but does not revalue assets and liabilities. D. revalues assets but not liabilities, and records goodwill to the continuing partner but not to the withdrawing partner. E. revalues assets and liabilities but does not record goodwill
E
Which of the following are required to be disclosed in interim reports? A. Cash flows from investing activities. B. Change in cash. C. Total current liabilities. D. Total assets. E. Gross revenues.
E
Which of the following could be used as a basis to allocate profits among partners who are active in the management of the partnership? 1) Allocation of salaries. 2) The number of years with the partnership. 3) The amount of time each partner works. 4) The average capital invested. A. 1 and 2. B. 1 and 3. C. 1, 2, and 4. D. 1, 3, and 4. E. 1, 2, 3, and 4.
E
Which of the following is not true for an operating segment according to U.S. GAAP? A. Discrete financial information generated by the internal accounting system is available. B. The segment earns revenues and incurs expenses. C. The segment is regularly reviewed by a chief decision maker to assess performance decisions. D. The segment is regularly reviewed by a chief decision maker to make resource allocations. E An organizational unit can not be an operating segment if all of its operating transactions are only with . other segments of the organization.
E
Which of the following is reported for interim financial reports using the discrete approach? A. Income tax expense. B. Seasonal items. C. Change in accounting principle. D. Property tax expense. E. Extraordinary gains.
E
Which of the following items of information are required to be included in interim reports for each operating segment? (I.) Revenues from external customers (II.) Segment profit or loss (III.) Reconciliation of segment profit or loss to the enterprise's total income before taxes (IV.) Intersegment revenues A. I and III only. B. I and II only. C. I, II and III. D. II and III only. E. I, II, III, and IV.
E
Which of the following operating segment disclosures is not required by U.S. GAAP? A. Interest expense. B. Intersegment sales. C. Extraordinary items. D. Discontinued operations. E. Liabilities.
E
Which of the following type of organization is classified as a partnership, or similar to a partnership, for tax purposes? (I.) Limited Liability Company (II.) Limited Liability Partnership (III.) Subchapter S Corporation A. II only. B. II and III. C. I and II. D. I and III. E. I, II, and III
E
Which of the following will not result in the termination and liquidation of a partnership? 1) Partners are incompatible and choose to cease operations. 2) There are excessive losses that are expected to continue. 3) Retirement of a partner. A. 1 only B. 1 and 2 only C. 2 and 3 only D. 3 only E. 1, 2 ,and 3
E
Which one of the following Federal laws was enacted in 1935? A. Securities Act. B. Securities Exchange Act. C. Trust Indenture Act. D. Investment Company Act. E. Public Utility Holding Company Act.
E
Which one of the following forms is used in connection with registration of securities of real estate companies? A. S-8. B. S-1. C. S-4. D. S-3. E. S-11.
E
Which one of the following forms is used when no other form is prescribed? A. S-4. B. S-3. C. S-11. D. S-8. E. S-1.
E
Which one of the following requires the audit committee to be responsible for the appointment and compensation of the external auditor? A. The Securities Act of 1933. B. The Securities Exchange Act of 1934. C. The Investment Company Act of 1940. D. The Foreign Corrupt Practices Act of 1977. E. The Sarbanes-Oxley Act of 2002.
E
What is Form 10-K? A. A quarterly report filed with the SEC. B. An annual report filed with the SEC. C. A semiannual report filed with the SEC. D. A form filed with the SEC before the company issues stock for the first time. E. A form filed with the SEC before issuing stocks to acquire another company.
B
What information does U.S. GAAP require to be disclosed for a major customer? A. The identity of the customer. B. The operating segment reporting sales to the customer. C. The geographic area of the customer. D. The percentage of sales derived from the customer. E. The length of time the customer has been a customer of the company
B
Which one of the following statements is correct? A. If a partner of a liquidating partnership is unable to pay a capital account deficit, the deficit is absorbed. by the other partners in the profit and loss ratio of those partners. B. Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account. balances if there is no income-sharing plan in the partnership contract. C.A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan. D. Partners may not receive any cash before partnership creditors receive cash when liquidating a partnership. E. All cash payments to partners are made using their profit and loss ratio when liquidating the partnership.
A
A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct?(I.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance. (II.) If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible. (III.) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered. A. I, II, and III. B. I and III only. C. I and II only. D. II and III only. E. None of the above.
B
EDGAR stands for: A. Electronic Debits, Gains, Assets and Revenues System. B. Electronic Data Gathering, Analysis, and Retrieval System. C. Explanatory Data Gathering, Analysis, and Retrieval System. D. Explanatory Debits, Gains, Assets and Revenues System. E. Electronic Data, Gross Analysis, and Revenues System.
B
Regulation S-K: A. controls the listing of securities by stock exchanges. B. establishes requirements for nonfinancial information to be filed with the SEC. C. prescribes the form of financial statements to be filed with the SEC. D. describes the internal controls a publicly traded company must maintain. E. prescribes the financial disclosure information that must be included in filings with the SEC
B
The SEC's operating costs are supported through A. tax revenues of the federal government. B. registration fees charged to issuers offering securities to the public. C. fees paid by stock exchanges. D. fees paid by stock brokers. E. fees paid by accounting firms that practice before the SEC.
B
The audit committee of an entity subject to SEC regulation will do all of the following except: A. be responsible for agreeing to fee compensation of the independent audit firm. B. sign certification of the annual financial statements. C. be comprised only of individuals who are not members of management. D. approve nonaudit services provided by the independent audit firm. E. serve as liaison between the board of directors and the independent audit firm
B
The disadvantages of the partnership form of business organization, compared to corporations, include A. the legal requirements for formation. B. unlimited liability for the partners. C. the requirement for the partnership to pay income taxes. D. the extent of governmental regulation. E. the complexity of operations.
B
The goals of the SEC include all except which one of the following? A. Prohibiting the dissemination of materially misstated information. B. Controlling the number of companies whose stock is listed on major stock exchanges. C. Regulating the operation of securities markets. D Ensuring that full and fair information is disclosed to all investors before the securities of a company . are allowed to be bought and sold. E. Preventing the misuse of information especially by inside parties.
B
Cherryhill and Hace had been partners for several years, and they decided to admit Quincy to the partnership. The accountant for the partnership believed that the dissolved partnership and the newly formed partnership were two separate entities. What method would the accountant have used for recording the admission of Quincy to the partnership? A. The bonus method. B. The equity method. C. The goodwill method. D. The proportionate method. E. The cost method.
C
A proxy statement must be filed with the SEC at least how many days before being distributed? A. 30. B. 60. C. 10. D. 90. E. 7.
C
A wrap-around filing: A. may be used by large companies to sell securities over a period of two years without refiling with the SEC. B. is a simplified registration procedure for securities to be issued by small companies. C. allows a company to simplify its form 10-K by referring to information in its annual report. D. is a filing completed using the SEC's electronic filing system. E. may remain in effect for a period of one to five years.
C
Information required in proxy statements includes all except which of the following? A. Listing of company directors and executive officers. B. Description of the business activities including principal products and sources and availability of raw materials. C. Market price of the company's common stock for each quarterly period within the two most recent fiscal years. D.Five-year summary of operations including sales, total assets, income from continuing operations, and cash dividends per share. E. Two-year summary of industry segments, export sales, and foreign and domestic operations
E
Betsy Kirkland, Inc. incurred a flood loss during the first quarter of 2011 that is deemed both unusual and infrequent. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to: A. Ignore the loss. B. Record the loss in the first quarter as an extraordinary loss, net of income taxes. C. Record one-fourth of the loss in the first quarter as an extraordinary loss, net of income taxes. D. Ignore the loss in the first quarter, and record it in the annual statement only. E Record the loss in the first quarter, but not as an extraordinary loss, and disclose the loss in a separate . note or in the income statement as a separate line item.
E
How has the SEC exercised its power with regard to the continuing evolution of accounting principles? 1. Issuing Financial Reporting Releases (FRRs). 2. Requiring additional disclosures in notes to financial statements. 3. Declaring a moratorium on the use of specified accounting practices. 4. Overruling the FASB. A. 1 and 4. B. 1, 3, and 4. C. 1 and 3. D. 1, 2, and 4. E. 1, 2, 3, and 4.
E