Chapter 7 Quiz

Which of the following represents each shareholder's portion of a public company's earnings? -Dividend -Security -Profit -Asset

Dividend

The main goal of ______________ is to protect shareholders and investors from financial fraud. -Sarbanes-Oxley Act (SOX) -Gramm-Leach-Bliley Act (GLBA) -Securities and Exchange Commission (SEC) -Public Company Accounting Oversight Board (PCAOB)

Sarbanes-Oxley Act (SOX)

Sarbanes-Oxley Act (SOX) ______________ requires chief executive officers (CEOs) and chief financial officers (CFOs) to certify a company's Securities and Exchange Commission (SEC) reports. -Section 906 -Section 404 -Section 302 -Section 309

Section 302

Which of the following types of information is NOT included on a Form 10-K? -Financial statements -Instances of known insider trading activities -Auditor's report -Explanation of how the company is organized and operates

Instances of known insider trading activities

Which of the following does NOT trigger a Form 8-K disclosure requirement? -Filing for bankruptcy -Selling of significant assets -Making a profit -Getting a loan

Making a profit

Which of the following was NOT one of the outcomes of the Enron scandal? -The Securities and Exchange Commission (SEC) began to require more information to be reported on its financial statements. -Public companies are required to file one comprehensive financial disclosure statement with the Securities and Exchange Commission (SEC). -The Securities and Exchange Commission (SEC) began to require that the accuracy of financial statements be certified in a number of different ways. -Investors started to significantly lose confidence in large public companies.

Public companies are required to file one comprehensive financial disclosure statement with the Securities and Exchange Commission (SEC).

Sarbanes-Oxley Act (SOX) _________ requires a company's executive management to report on the effectiveness of the company's internal controls over financial reporting (ICFR). -Section 302 -Section 404 -Section 906 -Section 309

Section 404

Sarbanes-Oxley Act (SOX) ___________ imposes criminal liability for fraudulent financial certifications. -Section 906 -Section 404 -Section 302 -Section 309

Section 906

A ______________ provides a summary of a company's financial condition at a certain period. -profit and loss statement -prospectus -futures contract -balance sheet

balance sheet

Public companies are required to file a number of financial disclosure statements with the Securities and Exchange Commission (SEC). What type of document is Form 10-K? -An annual report -A quarterly report -The current report -A privacy report

An annual report

Sponsored by five U.S. financial organizations, ___________ is a nonprofit organization that was established in 1985 to identify factors that contributed to fraudulent financial reporting. -COSO -PCAOB -GAAP -IFRS

COSO

Maria needs financial information for a publicly traded company. Specifically, she is looking for the company's most recent Form 10-K report and SOX Section 404 report on internal controls. Which of the following is the best source for Maria? -PCAOB -COSO -COBIT -EDGAR

EDGAR

Per Securities and Exchange Commission (SEC) rules, public companies must file which of the following if they experience a major event that could affect their financial condition? Companies must file with the SEC within 4 days of the event. -Form 10-K -Form 10-Q -Form 8-K -An internal controls over financial reporting (ICFR) form

Form 8-K

The Sarbanes-Oxley Act (SOX) requires the Securities and Exchange Commission (SEC) to review a public company's Form 10-K and Form 10-Q reports at least once every 3 years. It must do this to try to detect fraud and inaccurate financial statements that could harm the investing public. SOX identifies the factors that the SEC should consider when deciding to conduct a review. Which of the following is NOT one of the common factors that the SEC must consider? -Whether a company has amended its financial reports -How long the company has been in existence -How much stock the company has issued -The difference between a company's stock price and its earnings

How long the company has been in existence

Which of the following is owned by many investors in the form of stock? -Privately held company -Public company -Closed corporation -Sole proprietorship

Public company

The Sarbanes-Oxley Act (SOX) requires companies to monitor internal controls over financial reporting (ICFR) for outsourced operations. Many companies do this by asking their outsourcing companies to provide them with a System and Organization Controls (SOC) report after an audit. Which of the following is NOT true of SOC audits? -SOC audits are created by the outsourcing company. -SOC audits review a service organization's control activities related to the services that it provides to its customers. -SOC audits review the IT controls on the outsourced service. -A SOC audit helps a service organization show that it has proper safeguards in place to protect its customers' data.

SOC audits are created by the outsourcing company.

The Enron scandal and similar corporate scandals led to the creation of which of the following? -Securities and Exchange Commission (SEC) -Gramm-Leach-Bliley Act (GLBA) -Sarbanes-Oxley Act (SOX) -Public Company Accounting Oversight Board (PCAOB)

Sarbanes-Oxley Act (SOX)

Which of the following is NOT true of internal controls over financial reporting (ICFR)? -ICFR assure financial reports, records, and data are accurately maintained. -The Sarbanes-Oxley Act (SOX) describes the specific types of ICFR that companies must implement. -The Sarbanes-Oxley Act (SOX) requires a company's executive management to report on the effectiveness of the company's ICFR. -After management makes its yearly report on its ICFR, outside auditors must review the report and verify that the ICFR work.

The Sarbanes-Oxley Act (SOX) describes the specific types of ICFR that companies must implement.

Under the Sarbanes-Oxley Act (SOX), _________________ are the processes and procedures that a company uses to provide reasonable assurance that its financial reports are reliable. -disclosure controls -internal controls -disclosures -risk assessments

internal controls

The _______________ component of the Committee of Sponsoring Organizations (COSO) of the Treadway Commission framework refers to the identification and review of risks that are internal and external to the organization. -control activities -monitoring -risk assessment -control environment

risk assessment