Series 65: Unit 7 Quiz 2

SSS Corporation's total assets amount to $780,000, of which $260,000 represents current assets. Total liabilities equal $370,000, of which $200,000 is considered long-term or other liabilities. What is SSS Corporation's shareholders' equity? A. $410,000 B. $1,150,000 C. $980,000 D. $170,000

$410,000

An IAR is doing some research on a company. When viewing the corporation's financial statements, prepaid expenses would most likely be found as A. a current asset on the balance sheet. B. a current liability on the balance sheet. C. a fixed asset on the balance sheet. D. an expense on the income statement.

A current asset on the balance sheet

Which of the following equations correctly shows the relationship between the items on a company's balance sheet? A. Assets + liabilities = net worth B. Assets = liabilities − net worth C. Assets = liabilities + stockholders' equity D. Assets = stockholders' equity − liabilities

Assets = liabilities + stockholders' equity

Looking at the balance sheet, a corporation builds its capital structure with all of the following except A. long-term debt. B. cash. C. capital stock. D. retained earnings.

Cash

What is the term given to the item, typically found at the bottom of a corporation's balance sheet, that describes such things as significant accounting policies, commitments made by the company, and potential liabilities and potential losses? A. Contingency statement B. Offline items C. Resource material D. Footnotes

Footnotes

Federal securities laws require publicly traded companies to disclose certain information on a regular basis. Which of these forms must be submitted quarterly? A. Form 8-K B. Form 10-K C. Form 10-Q D. Form PF

Form 10-Q

Under SEC regulations, publicly traded (reporting) companies are required to file all of the following except A. Form 10-K. B. Form 10-Q. C. Form 13F. D. Form 8-K.

Form 13F

What is the purpose of the Securities Exchange Act of 1934? A. It regulates the persons involved in the secondary market. B. It provides policies relating to unethical business practices. C. It provides standards among the states. D. It provides requirements relating to new issues.

It regulates the persons involved in the secondary market

Components of a company's net worth would include all of these except A. inventory. B. fixed assets. C. operating income. D. goodwill.

Operating income

LMN Manufacturing Company, listed on the NYSE, is an SEC reporting company. Each of the following would require the filing of Form 8-K except A. acquisition of a major asset. B. relocation of a wholly owned subsidiary. C. a change in the external CPA firm engaged to perform the annual audit. D. a change in top management.

Relocation of a wholly owned subsidiary

KPT, Inc., is preparing to report its net income for the past year. An increase in which of the following causes a decrease in the reported net income? 1. Tax rate 2. Cash dividend 3. Interest charged on bank loans

Tax rate and interest charged on bank loans

When cash flow of a business is negative, all of the following are true except A. the company may struggle to pay its bills. B. the company might not be agile enough to respond to new opportunities. C. the company might have a hard time figuring out how to cover expenses it hasn't budgeted for. D. the company will probably increase its dividend.

The company will probably increase its dividend

Publicly traded corporations are generally required to have an annual independent audit of their financial records. What is the highest opinion offered under GAAP? A. Adverse opinion B. Unqualified opinion C. Disclaimer of opinion D. Qualified opinion

Unqualified opinion

A client asks her investment adviser representative what footnotes to the financial statements are for. The best reply would be that footnotes A. serve as a bibliography indicating where additional information may be obtained. B. contain information that doesn't have a place in the main body of the financial statements. C. are used to explain how the various ratios are computed because companies recognize that many shareholders do not have a financial background. D. contain a detailed history of the enterprise and its products or services.

Contain information that doesn't have a place in the main body of the financial statements

If a corporation issues mortgage bonds, all of the following would be affected except A. total assets. B. total liabilities. C. working capital. D. shareholders' equity.

Shareholders' equity