Advanced- Chapter 16

Form 8-K

A significant event affecting a company registered under the Securities and Exchange Act of 1934 should be reported on which of the following? a. Form 10-K b. Form S-1 c. Form 8-K d. Form 11-K

New York Stock Exchange

Formation and meaningful utilization of an audit committee of the board of directors is required of publicly traded companies that are subject to the rules of which of the following? 1. Securities and Exchange Commission 2. Financial Accounting Standards Board 3. New York Stock Exchange 4. National Association of Securities Dealers

A major business acquisition

The SEC requires Form 8-K to be filed with the commission within four days after the end of the month in which a significant event transpired. However, financial statements accompany Form 8-K only under certain conditions. Which event requires financial statements to accompany Form 8-K? 1. A material default on a senior security 2. A write-down, write-off, or abandonment of assets 3. A major business aquisition 4. A change in the registrant's certifying accountants

The SEC regulates only securities offered for public sale

The SEC was established in 1934 to help regulate the United States securities market. Which of the following statements is trust concerning the SEC? a. The SEC prohibits the sale of speculative securities b. Registration with the SEC guarantees the accuracy of the registrant's prospectus c. The SEC's initial influence and authority has diminished in recent years as stock exchanges have become more organized and better able to police themselves d. The SEC regulates only securities offered for public sale

A company having a public float of less than $75 million

What is a "non-accelerated filer"? 1. A company with fewer than five employees 2. A company having a public float of less than $75 million 3. A not-for-profit organization 4. A financial services organization

EDGAR

What is the name of the SEC's online database of company filings? 1. XBRL 2. DRVA 3. VaR 4. EDGAR

Consolidation of special purpose entities

After the Enron accounting scandal, the SEC encouraged the FASB to quickly develop a new standard on what topic? 1. Consolidation of special purpose entities 2. Convergence with IFRS 3. Mark-to-market accounting for financial instruments 4. Valuation of equity-based compensation

have no direct responsibility for the results of a company's operations.

An audit committee of the board of directors consisting of outside directors should be objective in arbitrating disputes between a company's top management and the external auditor because audit committee members a. have no direct responsibility for the results of a company's operations. b. have only limited contacts with the external auditor. c. rely on senior management's opinions to resolve disputes with the external auditor. d. are required by the Securities and Exchange Act of 1934 to oversee the progress of the annual external audit.

A municipal bond

Assuming that all other criteria regarding the issuing organization and its "security" are met, which one of the following is not a "security" under the jurisdiction of the SEC? a. A trust certificate b. A municipal bond. c. An oil drilling venture participation unit. d. A limited partnership share.

FRRs represent requirements applicable to the form and content of financial statements filed with the SEC, SABs represent accounting interpretations followed by the SEC.

Financial Reporting Releases (FRRs) and Staff Accounting Bulletins (SABs) are two pronouncements issues by t the SEC. How do FRRs and SABs differ? a. FRRs are part of the 1934 Securities Exchange Act while SABs are not b. SABs represent the official rules of the SEC while FRRs do not c. SABs represent amendments to Regulation S-X, FRRs do not d. FRRs represent requirements applicable to the form and content of financial statements filed with the SEC, SABs represent accounting interpretations followed by the SEC.

the Securities and Exchange Commission

In cases of false or misleading disclosures in a registration statement that the SEC has allowed to become effective in conjunction with the public sale of securities, investors have the potential for legal recourse (for example, damage suits) against all of the following except 1. the Securities and Exchange Commission 2. the issuing entity 3. the underwriter (managing broker) of the sale 4. the issuing entity's external accountant

makes no guarantees regarding the registration statement's material accuracy

In the registration and sale of new securities issues, the SEC 1. provides a rating of the investment quality of the security 2. may not allow the registration to go effective if it judges the security's investment risk to be too great 3. allows all registrations to go effective if the issuing company's external accountant is satisfied that disclosures and representations are not misleading 4. makes no guarantees regarding the registration statement's material accuracy

Regulation S-K

Nonfinancial statement disclosures are specified in which of the following? 1. Regulation S-K 2. Financial Reporting Releases 3. Staff Accounting Bulletins 4. Regulation S-X

Inclusion of information on officers' remuneration in Form 10-K by reference to the same information in the shareholders' proxy statement

SEC regulations provide for a procedure known as incorporation by reference. Which of the following best illustrates the concept of incorporation by reference? 1. A partnership is incorporated by reference to the U.S. Tax Code 2. The incorporation of a proprietorship or partnership 3. Inclusion of information on officers' remuneration in Form 10-K by reference to the same information in the shareholders' proxy statement 4. Footnote reference to market data per share since incorporation

proxy statement

Shareholders may ask or allow others to enter their vote at a shareholders meeting that they are unable to attend. The document furnished to shareholders to provide background information for their vote is a 1. registration statement 2. proxy statement 3. 10-K report 4. prospectus

Accepting offers from potential investors to purchase securities being registered

The 1933 Securities Act provides for a 20-day waiting period between the filing and effective dates of the registration. During this waiting period the registrant is prohibited from engaging in which of these activities? 1. Preparing any amendments to the registration statement 2. Accepting offers from potential investors to purchase securities being registered 3. Placing an advertisement indicating who will accept orders for the securities being registered 4. Issuing a prospectus in preliminary form

Anyone who bases his or her trading activities on inside information

The SEC's antifraud rules prohibit trading on the basis of inside information of a business corporation's stock by which of these? 1. Officers 2. Officers and directors 3. Officers, directors, and beneficial holders of 10% of the corporation's stock 4. Anyone who bases his or her trading activities on inside information

Makes regulations and rules pertaining more to disclosure outside the financial statements than to the setting of accounting principles.

The role of the SEC regarding financial accounting for public companies is that the SEC does which of the following? a. Promulgates generally accepted accounting principles b. Regularly adopts requirements that conflict with FASB pronouncements c. Makes regulations and rules pertaining to filings with the SEC but not to annual or quarterly reports to shareholders d. Makes regulations and rules pertaining more to disclosure outside the financial statements than to the setting of accounting principles.

The SEC has little, if any, authority over disclosures in corporate annual reports mailed to shareholders with proxy solicitations. Here, the type of information disclosed and the format to be used are left to the discretion of management

Two important topics concerning the SEC are the role it plays in developing accounting principles and the impact the SEC has on the accounting profession and business in general. Which statement concerning the SEC's authority relative to accounting practice is false? 1. The SEC has the statutory authority to regulate and to prescribe the form and content of financial statements and other reports it receives 2. Regulation S-X of the SEC is the principal source relating to the form and content of financial statements to be included in registration statements and financial reports filed with the SEC 3. The SEC has little, if any, authority over disclosures in corporate annual reports mailed to shareholders with proxy solicitations. Here, the type of information disclosed and the format to be used are left to the discretion of management 4. If the SEC disagrees with some presentation in the registrant's financial statements but the principles used by the registrant have substantial authoritative support, the SEC may accept footnotes to the statements in lieu of correcting the statements to the SEC view, provided the SEC has not previously expressed its opinion on the matter in published material

Division of Corporation Finance

Which of the SEC's organizational units - divisions and principals offices - reviews the registration statements, annual reports, and proxy statements filed with the commission? a. Office of the Chief Accountant b. Division of Corporation Finance c. Division of Enforcement d. Division of the Comptroller

Securities Exchange Act of 1934

Which of the following acts gives the SEC the ultimate power to suspend trading in a security, delist a security, and prevent brokers and dealers from working in the securities market? a. Securities Investors Protection Act of 1934. b. Securities Act of 1934. c. Securities Exchange Act of 1934. d. Investment Company Act of 1940.

Prospectus requirements

Which of the following are not requirements imposed by the Securities Exchange Act of 1934 and its amendments? 1. Proxy solicitation requirements 2. Prospectus requirements 3. Insider trading requirements 4. Accounting, recordkeeping, and internal control requirements

Public accounting firms

Which of the following categories is not registered by the SEC? 1. Securities brokers who deal in over-the-counter markets 2. Securities brokers who deal only in interstate markets 3. Public accounting firms 3. Securities exchanges

Specifies the general form and content of financial statements filed with the SEC

Which of the following describes Regulation S-X? 1. Specifies the information that can be incorporated by reference from the annual report into the registration statement filed with the SEC 2. Specifies the regulations and reporting requirements of proxy solicitations 3. Provides the basis for generally accepted accounting principles 4. Specifies the general form and content of financial statements filed with the SEC

To approve the securities of corporations that are to be traded publicly

Which of the following is not a purpose of the Securities Exchange Act of 1934? 1. To establish federal regulation over securities exchanges and markets 2. To prevent unfair practices on securities exchanges and markets 3. To discourage and prevent the use to credit in financing excessive speculation in securities 4. To approve the securities of corporations that are to be traded publicly

Financial forecasts for the next two fiscal years

Which of the following is not required for the registration statements filed under the Securities Act of 1933? 1. Nature and history of the issuer's business 2. Description of the securities being registered 3. Estimate of the net proceeds and the expected uses of the proceeds 4. Financial forecasts for the next two fiscal years

Foreign Corrupt Practices Act of 1977

Which of the following laws requires companies to maintain accurate accounting records and a system of effective internal accounting controls? 1. Securities Exchange Act of 1934 2. Securities Investor Protection Act of 1970 3. Foreign Corrupt Practices Act of 1977 4. Dodd-Frank Act of 2010

Form S-1, the basic form for new security registration , is an elaborate checklist of rules to be followed and questions to be answered.

Which of the following statements related to registration of new securities is false? a. Registration of new securities is governed by the Securities Act of 1933. b. Form S-1, the basic form for new security registration , is an elaborate checklist of rules to be followed and questions to be answered. c. A "private placement" may be exempt from detailed registration requirements. d. The independent public accountant reviews and audits information included in the registration statement.

Form 10-K, the annual report, is governed only by Regulation S-X, not Regulation S-K.

Which of the following statements related to the SEC's periodic reporting requirements is false? a. Form 10-K, the annual report, is governed only by Regulation S-X, not Regulation S-K. b. Financial statements in Form 10-Q, the quarterly report, follow typical interim reporting principles contained in ASC Topic 270. c. Required Form 10-Q financial statements include balance sheets, statements of income and comprehensive income and cash flow statements. d. Form 10-Q financial statements may include fewer line items than those in Form 10-K

Election of a new vice-president of finance to replace the retiring incumbent

Which of these events does not require a company to file a Form 8-K? 1. Acquisition or disposition of a significant amount of assets 2. Change in certifying public accountants 3. Election of a new vice-president of finance to replace the retiring incumbent 4. Default in the payment of principal, interest, or sinking fund installment

Comfort letter to the underwriter and legal counsel from the company's independent accountant

Which of these items is not required by the SEC in either the Securities Act of 1933 or the Securities Exchange Act of 1934? 1. Identification of directors and executive officers with the principal occupation and employer of each 2. Identification of the principal markets in which the firm's securities are traded 3. Range of market prices and dividends for each quarter of the two most recent fiscal years 4. Comfort letter to the underwriter and legal counsel from the company's independent accountant

An audit report from an independent accountant

Which one of the following items need not be filed with Form 10-Q? 1. Matters reported on Form 8-K during the quarter 2. A description of legal proceedings 3. Income statements for the most recent quarter and for the equivalent quarter from the preceding year, and year-to-date data for both years 4. An audit report from an independent accountant

Item 7

Which section of Form 10-K is used for management's discussion and analysis of financial condition and results of operations? 1. Item 7 2. Item 8 3. Item 1A 4. Item 4A

Acquisition of a large subsidiary

Within four days after any event of material importance to the stockholders occurs, a company must file a Form 8-K with the SEC to disclose the event. Which of these is an example of the type of event to be disclosed? 1. Salary increases to the officers 2. A change in projected earnings per share from $12 to $12.11 per share 3. The purchase of bank certificates of deposit 4. Acquisition of a large subsidiary