Series 65 Unit 7
Issuance of which of the following would most likely increase the leverage in a company's capital structure?
Bonds
When a company recognizes a sale only when payment is made, it is using which form of accounting?
Cash
Which of the following best describe the balance sheet formula? I. Assets minus liabilities equals net worth. II. Sales minus expenses equals operating income. III. Liabilities plus equity equals assets. IV. Dividends plus retained earnings equals net income.
I and III
Which items would change if a company declared a cash dividend? I. Working capital II. Total assets III. Total liabilities IV. Shareholders' equity
I, II, IV
What is the purpose of the Securities Exchange Act of 1934?
It regulates the persons involved in the secondary market.
Current liabilities on a company's balance sheet would include
accounts payable.
An analyst reviewing a company's financial statements would examine the footnotes to
discover any pending legal action against the company.
Which of the following equations correctly shows the relationship between the items on a company's balance sheet?
Assets = liabilities + stockholders' equity
In order to be in compliance with SEC reporting rules, a company will typically file a Form 10-Q how many times during its fiscal year?
Three times
A commentator on a cable news show mentions that the capital structure of the Lowveh Corporation is highly leveraged. This means that the company
has significant long-term debt.
Net income
represents the amount of money remaining after all expenses, including taxes.
Those investors wishing to examine a document that would probably give them the most information about a corporation's current and planned operations would seek out
the annual report.
Federal securities laws require publicly traded companies to disclose certain information on a regular basis. Which of these forms must be submitted quarterly?
Form 10-Q
An analyst wishing to check on the most recent financial performance of an SEC-registered issuer would probably examine the
Form 10-Q.
The SEC requires that reporting companies (those registered with the SEC) file certain information within specified time limits. Which of the following reports carries the shortest time limit?
Form 8-K
When a member of the board of directors of a publicly traded company resigns due to a disagreement over an operational matter,
Form 8-K must be filed with the SEC within four business days of the event.
All of the following appear on a corporation's balance sheet as fixed assets except
inventory.
All of the following corporate actions would have the effect of increasing the firm's net worth except
issuing convertible debentures.
The owners' equity portion of a corporation's balance sheet would contain all of the following except
net income.
If a client has 100 shares of XYZ publicly traded stock and it undergoes a split, afterward the client will have
no effective change in the value of the ownership share.
An analyst wishing to view a good consolidated indicator of a business's cash inflow and outflow would most likely ask to look at
the statement of cash flows.
Which of the following is not affected by the issuance of a bond?
Shareholders' equity
Many businesses choose to use a date other than December 31 to close out their financial year for accounting purposes. When this is done, it is said that the entity is reporting on
a fiscal-year basis.
Publicly traded corporations are subject to an annual audit of their financial records. Those audits must comply with GAAP (generally accepted accounting principles). When preparing to recommend a stock to a customer, you would most likely want to see that the auditor gave
an unqualified opinion.
A client asks her investment adviser representative what footnotes to the financial statements are for. The best reply would be that footnotes
contain information that doesn't have a place in the main body of the financial statements.
When reviewing a corporation's financial statements, shareholders' equity is computed by
subtracting total liabilities from total assets.
The owners' equity portion of a corporation's balance sheet would contain all of the following except
net income. net income is only found on the income statement
One of the best sources of financial information is found in the reports required to be filed with the SEC by publicly traded companies. The easiest way to access this information is by
using EDGAR.
A term used to describe the results of subtracting a corporation's liabilities from its assets is
owners' equity.
All of the following are considered to be components of cash flow except
banking activities.
If, during a given year, a company has net income of $1 million and pays out dividends of $800,000, its retained earnings will
increase by $200,000.
Which of the following statements about balance sheets are true? I. Balance sheets provide a snapshot of a company's financial position on a given date. II. Balance sheets represent the relationship between a company's assets, liabilities, and stockholders' equity. III. Balance sheets provide a record of a company's earnings over a given period.
I and II
An analyst comparing revenues with expenses is most likely analyzing
cash flow.
Looking at the balance sheet, a corporation builds its capital structure with all of the following except
cash.
On a balance sheet, dividends payable would fall under the category of
current liabilities.
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?
Footnotes
Under SEC rules, Form 8-K must be filed
within 4 business days of the event.
Publicly traded corporations are generally required to have an annual independent audit of their financial records. What is the highest opinion offered under GAAP?
Unqualified opinion
When an analyst adds back the current year's depreciation to the net income, she is computing the company's
cash flow from operations.
