Advanced Live Quiz 4

Mason Company paid its annual property taxes of $240,000 on February 15, 20X9. Mason also anticipates that its annual repairs expense for 20X9 will be $1,200,000. This amount is usually incurred and paid in July and August when operations are shut down so that machinery and equipment can be repaired. What amount should Mason deduct for property taxes and repairs in each quarter for 20X9?

$360,000 all 4 quarters

Biometric Corporation's revenue for the year ended December 31, 20X6, was as follows: Consolidated revenue per income statement: $400,000 Intersegment sales: $30,000 Intersegment transfers: $20,000 Combined revenue of all industry segments: $450,000 Biometric has a reportable operating segment if that segment's revenue exceeds:

$42,000

Trimester Corporation's revenue for the year ended December 31, 20X8, was as follows: Consolidated revenue per income statement: $600,000 Intersegment sales: $45,000 Intersegment transfers: $10,000 Combined revenue of all industry segments: $655,000 Trimester has a reportable operating segment if that segment's revenue exceeds:

$65,000

Derby Company pays its executives a bonus of 6 percent of income before deducting the bonus and income taxes. For the quarter ended March 31, 20X8, Derby had income before the bonus and income tax of $12,000,000. For the year ended December 31, 20X8, Derby estimates that its income before bonus and income taxes will be $70,000,000. For the quarter ended March 31, 20X8, what is the amount of the bonus that Derby should deduct on its income statement?

$720,000

Form 10-Q is filed with the SEC to keep both investors and experts apprised of a company's operations and financial position. Form 10-Q is a report that is filed within

35 days after the end of each of the first three quarters of each fiscal year.

Form 8-K must generally be submitted to the SEC within four days after the occurrence of a significant event. Which one of the following is not an event that would be reported by Form 8-K?

A change in accounting principle.

Which of the following securities is exempt from registration under the Securities Act of 1933?

A class of stock given in exchange for another class by the issuer to its existing stockholders without the issuer paying a commission.

An external auditor's involvement with a Form 10-Q that is being prepared for filing with the SEC would most likely consist of

A review of the interim financial statements included in Form 10-Q

The 1933 Securities Act provides for a 20-day review period between the filing and the effective date of the registration. During this review period, the registrant is prohibited from

Accepting offers to purchase the securities being registered from potential investors.

Which of the following persons is not an insider of a corporation subject to the Securities Exchange Act of 1934 registration and reporting requirements?

An owner of 5 percent of the corporation's outstanding debentures.

Form 10-K is filed with the SEC to update the information a company supplied when filing a registration statement under the Securities and Exchange Act of 1934. Form 10-K is a report that is filed

Annually within 60 days of the end of a company's fiscal year.

Davis Company uses LIFO for all of its inventories. During its second quarter of 20X9, Davis experienced a LIFO liquidation. Davis fully expects to replace the liquidated inventory in the early part of the third quarter. How should Davis report the inventory temporarily liquidated on its income statement for the second quarter?

Cost of goods sold for the second quarter should include the expected replacement cost of the goods temporarily liquidated.

The preparation of which of the following items is covered by Regulation S-K?

Descriptions of business

In the registration and sales of new securities issues, the SEC

Does not make any guarantees regarding the material accuracy of the registration statement.

Which one of the following items is not required to be included in a company's periodic 8-K report filed with the SEC when significant events occur?

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

An offering made under the provisions of Regulation A of the Securities Act of 1933 requires that the issuer

File an offering circular with the SEC.

ASC 280 requires certain disclosures about major customers. All of the following statements about those disclosures are true with the exception of which statement?

For applying the disclosure test a threshold of 10 percent of total revenues is mandated.

Which of the following forms is the most comprehensive registration statement?

Form S-1

Which of the following is true about the Foreign Corrupt Practices Act of 1977 (FCPA)? I. Publicly held companies should maintain an adequate system of internal control. II. Individuals associated with U.S. companies are prohibited from bribing foreign officials for the purpose of securing a contract. III. Compensating or agents' fees are disallowed under all circumstances.

I and II

Which of the following types of securities or securities transactions are exempt from the need to be registered under the Securities Act of 1933? I. Commercial paper with a maturity of nine months or less. II. Intrastate issues in which the securities are offered and sold only within one state. III. Securities exchanged by an issuer exclusively with its existing shareholders with no commission charged.

I, II, and III

Before turning over the proceeds of a securities offering to a registrant, the underwriters frequently require a comfort letter from the public accountant. The comfort letter's purpose is to

Indicate whether the public accountant found any adverse financial change between the date of audit and the effective date of the securities offering.

Which of the following observations is true of the shelf registration rule?

It allows large companies to select the optimal time to sell their stock.

Which of the following acts helps businesses raise funds in public capital markets by minimizing regulatory requirements?

Jumpstart Our Business Startups (JOBS) Act

A major impact of the Foreign Corrupt Practices Act of 1977 is that registrants subject to the Securities Exchange Act of 1934 are required to

Keep records that reflect the transactions and dispositions of assets and maintain a system of internal accounting controls.

All of the following situations require a retrospective application of a change in a reporting entity except for:

Presenting foreign subsidiaries in addition to domestic subsidiaries.

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

Proxy statement

Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the following provisions of the act would Pix have to comply with for the offering to be exempt?

Regulation D, Rule 506.

Zeus Corporation has determined that it has 15 reportable operating segments. In order to comply with the standard for segment disclosures, Zeus Corporation should do which of the following?

Report 10 reportable segments by combining the most closely related segments.

Which regulation created the Securities and Exchange Commission?

Securities Exchange Act of 1934

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 the

Securities and Exchange Commission.

Which of the following securities would be regulated by the provisions of the Securities Act of 1933?

Securities issued by insurance companies.

Stone Company reported $100,000,000 of revenues on its 20X8 income statement. During the year ended December 31, 20X8, Stone made sales of $8,000,000 to external customers in Western Europe. In addition, Stone made sales of $10,000,000 to the U.S. government and $4,000,000 of sales to various state governments. In the footnotes to its financial statements for 20X8, in reporting enterprisewide disclosures, Stone is required to disclose:

Segment Reporting the Revenue &Identity of Each Major Customer

Which of the following factors by itself requires a corporation to comply with the reporting requirements of the Securities Exchange Act of 1934?

Shares listed on a national securities exchange.

Regulation S-X

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

Which of the following covers new or revised administrative practices and interpretations used by the SEC staff in reviewing financial statements?

Staff Accounting Bulletins

Regulation S-K disclosure requirements of the SEC deal with the company's business, properties, and legal proceedings; selected five-year summary financial data; management's discussion and analysis of financial condition and results of operations; and

Supplementary financial information such as quarterly financial data and information on the effects of changing prices.

The SEC is organized into several divisions and principal offices. The organization unit that reviews registration statements, annual reports, and proxy statements filed with the Commission is

The Division of Corporation Finance.

Two interesting and important topics concerning the SEC are the role it plays in the development of accounting principles and the impact it has had and will continue to have on the accounting profession and business in general. Which of the following statements about the SEC's authority on accounting practice is false?

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

The Securities and Exchange Commission was established in 1934 to help regulate the U.S. securities market. Which of the following statements is true about the SEC?

The SEC regulates securities offered for public sale.

Within four days after the occurrence of any event that is of material importance to the stockholders, a company must file a Form 8-K information report with the SEC to disclose the event. An example of the type of event required to be disclosed is

The acquisition of a large subsidiary other than in the ordinary course of business.

Which of the following statements concerning the prospectus required by the Securities Act of 1933 is correct?

The prospectus is a part of the registration statement.

The SEC's Regulation S-X disclosure requirements address

The requirements for filing interim financial statements and pro forma financial information.

Which of the following is not a purpose of the Securities Exchange Act of 1934?

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

Schedule 13D is filed

by entities that acquire a beneficial ownership of more than 5 percent of a class of registered equity securities.

ASC 280 uses a(n) ______ approach to the definition of segments.

management

Regulation S-X presents the rules for preparing all of the following except:

management's discussion