Ch. 12 SmartBook

A ______ form is an annual report filed with the SEC to provide information and disclosures required by Regulation S-K and Regulation S-X.

10-K

A _____ form contains condensed interim financial statements.

10-Q

Verifies data included in the filing meets Regulation S-X.

Accountant

A deficiency letter is issued to request _________.

Additional information; Changes; Clarifications

Financial reporting standards for most publicly held companies can be changed by _______.

Amending Regulation S-X

The Securities Exchange commission is _________.

An independent agency of the federal government

Determines all non-financial information complies with Regulation S-K.

Analyst

Which of the following parties ensures that non-financial information in a registration statement complies with Regulation S-K?

Analyst

An audit client's audit committee must preapprove ______.

Any allowed service and disclose them in reports to the SEC.

Post-World War I and before the Great Crash of 1929, _________.

Approximately 20 million shareholders set out to make their fortunes in the stock market; It's estimated tat $50 billion of new securities were offered of which about half became worthless.

The Public Company Accounting Oversight Board (PCAOB) enforces ________ , quality control, and __________ rules.

Auditing; Independence

Which of the following sanctions are available to the Public Company Accounting Oversight Board (PCAOB) in reacting to findings of annual inspections?

Censure; Suspension or revocation of registration; Significant fines

Which of the following is correct regarding the composition of the SEC?

Commissioners serve five-year terms; The chairman is from the same political party as the president.

Conducts a formal audit.

Company's independent CPA

The Securities Exchange Act of 1934 requires ____________ (initial/continual) reporting of specified data by all companies that have securities traded on __________ (both/either) a national securities exchange and/or an over-the-counter market.

Continual; Either

The Securities Exchange Act of 1934 requires that a company that has securities traded on either a national securities exchange or an over-the-counter market must ________.

Continually report specific data to the SEC

The Sarbanes-Oxley Act of 2002 _______.

Created the PCAOB

Which of the following is issued to a company to request clarifications, changes, or additional information especially for filings involving an initial registration?

Deficiency letter

Which of the following is included in a prospectus?

Description of the business and properties owned by the issuer; An explanation of the intended use of the proceeds to be generated by the sale of new securities; Description of the risks associated with the securities.

Regulation S-K established requirements for disclosure of ________.

Descriptions of legal proceedings; Management's discussion and analysis of the current financial condition and results of operations.

Which of the following divisions of the SEC reviews registration statements, annual and quarterly filings, proxy materials, annual reports and tender offers?

Division of Corporation Finance

The most common issues facing this division of the SEC are insider trading, manipulation of the market price of a security, and issuance of securities without proper registration.

Division of Enforcement

Which of the following established the Consumer Financial Protection Bureau?

Dodd-Frank Act

The acronym for the SEC's system for electronic submission and storage of data is known as __________.

EDGAR

Which of the following is the SEC's system for electronic submission and storage of data?

EDGAR

When a registration statement is filed, the SEC _________.

Ensures full and fair disclosure of relevant financial information; Is responsible for making sure the information complies with all applicable regulations.

The Public Company Accounting Oversight Board (PCAOB) was granted _________ (limited/extensive) powers by _______.

Extensive; Congress

True or false: Foreign accounting firms are not required to register with the Public Company Accounting Oversight Board (PCAOB).

False

There was a limited support for __________ ________ of the securities markets prior to the Great Crash of 1929.

Federal; Regulation

A Form 8-K is ________.

Filed within 15 calendar days of the event.

Which of the following firms must register with the Public Company Accounting Oversight Board (PCAOB)?

Foreign firms that play a substantial role in the audit of an organization that has securities registered in the United States; Firms that prepare, issue, or participate in preparing an audit report for an issuer

Annual Report

Form 10-K

Quarterly Report

Form 10-Q

Disclosure of significant events

Form 8-K

Which of the following forms is not filed at regular intervals?

Form 8-K

Under Regulation D - Rule 504, a company offering no more than $1 million to any number of investors within a 12-month period must ______.

Give notice of the offering to the SEC within 15 days of the first sale

A significant portion of the Sarbanes-Oxley Act ensures that public accounting firms are _________.

Independent

The securities law often referred to as the "truth in securities law" regulates the _________ ________ of securities.

Initial; Offering

The SEC __________.

Is fully self-funded; Is a relatively small component of the federal government.

The Securities Act of 1933 ________.

Is intended to prevent deceit and misrepresentation in connection with the sale of securities.

The Public Company Accounting Oversight Board (PCAOB) __________.

Is not a government agency

The SEC generates fees primarily from ________.

Issuers and registration statement fees.

Which of the following is correct regarding Form 10-Q?

It contains interim, not annual, financial statements; It is not required following the fourth quarter of the year.

Which of the following is true regarding the FASB's Accounting Standards Codification?

It includes relevant portions of financial accounting and reporting guidance issued by the SEC

Which of the following are true of the SEC content in the FASB's Accounting Standards Codification?

It includes relevant portions of financial accounting and reporting guidance issued by the SEC; SEC sections are preceded by the letter "S."

The company's past, present, and future are described by management in the _________.

MD&A section

The mission of the SEC includes which of the following?

Maintain fair, orderly, efficient markets; Protect investors; Facilitate capital formation.

The 1933 and 1934 Acts put an end to stock price ________ and ________ of corporate information - practices that were common before the Great Crash of 1929.

Manipulation; Misuse

The SEC can exert its power by declaring a(n) _________ on the use of specific accounting procedures.

Moratorium

Members of the Public Company Accounting Oversight Board (PCAOB) _______.

Must cease all other professional and business activities

Regulation S-X established requirements for disclosure of ___________.

Notes to financial statements and related schedules; The form and content of the financial statements

Which part of the registration statement is primarily for the informational needs to SEC staff?

Part II

Which part of the registration statement need not be provided to prospective buyers of a company's securities?

Part II

When authoritative guidance is not present, the SEC can ______.

Prohibit a particular accounting method from being applied.

The Securities Exchange Act of 1934 ________.

Prohibits fraudulent and unfair behavior such as sales abuse practices and insider trading.

A(n) ________ includes financial statements for the issuing company audited by an independent CPA and a description of the risks associated with the securities.

Prospectus

The 10-K form _________.

Provides information and disclosures required by Regulation S-K and S-X; Is an annual report.

Which of the following is issued by management or other interested parties in hopes of securing voting rights to use at stockholders' meetings?

Proxy statement

Which of the following parties (unless exempted) must periodically file detailed reports with the SEC?

Publicly held companies; Issuers or registrants

Unless specifically exempted, all __________ __________ companies must periodically file detailed reports with the SEC.

Publicly; Held

The SEC's authority applies mainly to ________ ______ companies.

Publicly; Traded

Which of the following gives the SEC the ultimate legal authority for establishing accounting principles for most publicly held companies in the U.S.?

Regulation S-X

Verifies legal aspects of the registration statement.

SEC lawyer

The ________ retains authority to override or negate any pronouncements produced by the ____________.

SEC; FASB

The _________ has generally allowed the _________ (and previous authoritative groups) to establish accounting principles.

SEC; FASB

The Public Accounting Oversight Board was created by the _______.

Sarbanes-Oxley Act of 2002

Which of the following requires registration of new securities offered for public sale so that investors have adequate information?

Securities Act of 1933

Which of the following created the SEC and empowered it to require reporting by publicly owned companies?

Securities Exchange Act of 1934

Protecting investors and facilitating capital formation is the mission of the ________.

Securities Exchange Commission

When a registration statement is filed, corporate officials ________.

Take responsibility for the information contained in the registration statement

How are investors notified of management's priorities, accomplishments, and concerns?

The MD&A section of a registrant's filing

Which of the following organizations has effectively minimized self-regulation in the accounting profession?

The Public Company Accounting Oversight Board (PCAOB).

The Public Company Accounting Oversight Board (PCAOB) is under the control of ______.

The SEC

Which of the following is computed based on the value of the securities offered?

The SEC's registration fee for initial offerings of securities for sale to the public

The Sarbanes-Oxley Act requires the the auditor to report to ________.

The audit committee

Which of the following parties appoints and determines the compensation for the external auditor?

The audit committee

The evaluation of the quality of the investment is done by _______.

The public

Before the Great Crash of 1929, __________.

There was little support for federal regulation of the securities markets.

Which of the following statements is correct regarding the commissioners of the SEC?

They serve five-year staggered terms.

True or false: Securities offered by banks and charitable groups are considered exempt offerings.

True

Which of the following is the reason for a partial rollback of the Dodd-Frank Act in 2018?

Unnecessary burdens placed on small and medium-sized lenders

When a company initially offers securities for sale to the public, the SEC charges a registration fee based on the ________.

Value of the securities offered

The handling of the accounting for oil and gas clearly demonstrates the ________ ________ that the SEC maintains over the __________.

Veto; Power; FASB