Question 1

Which of the following statements concerning pro forma disclosures is not true?
A)They show the effects of major transactions that occur after the end of the fiscal period.
B)They show the effects of major transactions that have occurred during the year but are not fully reflected in the company's historical cost financial statements.
C)The SEC requires these to be presented only when the company has made an unusual asset exchange,or a restructuring of existing indebtedness.
D)They often take the form of summarized financial statements.

Accepted Answer

The statement that the SEC requires pro forma disclosures only when the company has made an unusual asset exchange or a restructuring of existing indebtedness is not true. The SEC requires pro forma disclosures for any major transaction that affects the company's financial statements.

Question 2

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions
-Comment Letter
A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Accepted Answer

The answer of Each of the following questions names an...

Question 3

Which of the following is defined as directly or indirectly having the power to vote the shares or investment power to sell the security?
A)Proxy
B)Significant influence
C)Control
D)Beneficial ownership

Accepted Answer

Beneficial ownership is defined as having the power to vote the shares or investment power to sell the security, either directly or indirectly. The other choices, such as proxy, significant influence, and control, may be related to ownership or decision-making, but they do not specifically refer to the power to vote or sell securities.

Question 4

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions
-"Red Herring" Prospectus
A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Accepted Answer

A "Red Herring" Prospectus provides preliminary information to investors about an upcoming issue.

Question 5

Which of the following observations is true of the shelf registration rule?
A)It is an option available to all listed companies.
B)Shelf registration is limited to 25 percent of the company's currently outstanding stock.
C)It allows private placements of an unlimited amount of securities.
D)It allows large companies to select the optimal time to sell their stock.

Accepted Answer

The shelf registration rule allows large companies to select the optimal time to sell their stock. Option A is incorrect, as shelf registration is not an option available to all listed companies, but only to certain issuers that meet the requirements. Option B is incorrect, as shelf registration does not have a limit on the percentage of currently outstanding stock. Option C is incorrect, as private placements still have limitations and are subject to certain requirements under the rule.

Question 6

Which of the following classes of information are included in the Form 10-K?
I.Management's discussion and analysis
II.Audited financial statements and footnotes
III.Auditor's opinion on the company's internal control system
A)I and II
B)I and III
C)II and III
D)I,II,and III

Accepted Answer

Form 10-K includes all three classes of information: management's discussion and analysis, audited financial statements and footnotes, and auditor's opinion on the company's internal control system.

Question 7

Accountants are liable for any materially false or misleading information contained in the registration statement filed with the SEC up to:
A)the date the registration statement is filed.
B)the date of the audit report.
C)the effective date of the registration statement.
D)the date securities are sold.

Accepted Answer

Accountants are liable for any materially false or misleading information contained in the registration statement filed with the SEC up to the effective date of the registration statement. This is because the effective date marks the point when the statement becomes publicly available and investors can rely on its accuracy.

Question 8

Pro forma disclosures are:
A)used to disclose unscheduled material events.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)"what-if" presentations often taking the form of summarized financial statements.

Accepted Answer

Pro forma disclosures are "what-if" presentations that often take the form of summarized financial statements. They are used to give investors an idea of how a company's financials would look if certain events or transactions had occurred. Pro forma disclosures can be useful in situations such as mergers and acquisitions or in the issuance of new securities.

Question 9

The SEC administers many laws and regulations governing the information made in files reports.
Required:
a)What is the difference in issues covered by Regulation S-X and Regulation S-K?
b)How do the issues covered by these regulations differ from the AAERs and SABs?

Accepted Answer

The answer of The SEC administers many laws and regulations...

Question 10

What does an underwriter typically require from an accountant which indicates that the company has fulfilled all the accounting requirements in the registration process?
A)A comment letter
B)An audit opinion
C)A "red herring" prospectus
D)A comfort letter

Accepted Answer

A comfort letter is a letter from an accountant to an underwriter that provides assurance that the financial information presented in a registration statement is accurate and complies with accounting requirements. It is typically required by underwriters as part of the due diligence process. An audit opinion and a comment letter may also be required, but they are not specifically related to indicating that the company has fulfilled all accounting requirements in the registration process. A "red herring" prospectus is a preliminary version of a prospectus and is not related to the accounting requirements.

Question 11

Proxy statements are:
A)filed by an entity that acquires a beneficial ownership of more than 5 percent in a company.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)used to disclose unscheduled material events.

Accepted Answer

Proxy statements are materials submitted to shareholders for votes on corporate matters. They provide important information on matters such as the election of directors, executive compensation, and shareholder proposals.

Question 12

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions
-"Tombstone ad"
A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Accepted Answer

A "Tombstone ad" is an advertisement that informs investors of an upcoming offering of securities. It typically provides basic information about the offering, such as the type of securities being offered and the underwriters involved.

Question 13

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.
A)I and II
B)II and III
C)I and III
D)I,II,and III

Accepted Answer

The FCPA requires publicly held companies to maintain adequate internal control systems and prohibits individuals associated with U.S. companies from bribing foreign officials to secure contracts. However, the FCPA does not disallow all compensating or agent fees, as long as they are reasonable and reflect the services provided.

Question 14

Information concerning the unexpected resignation of one or more of the registrant's directors would be disclosed on which of the following forms?
A)Form 10-K
B)Form 8-K
C)Form S-1
D)Form 10-Q

Accepted Answer

Information regarding the unexpected resignation of one or more directors would be considered a material event and would be required to be reported on Form 8-K within four business days of the event. Form 10-K is an annual report, Form S-1 is a registration statement for securities offerings, and Form 10-Q is a quarterly report that provides updates on a company's financial performance.

Question 15

Schedule 13D is filed:
A)by entities that acquire a beneficial ownership of more than 5 percent of a class of registered equity securities.
B)to broadly report material information that is being provided to securities analysts,selected institutional investors,or others.
C)to disclose material items related to asset-backed securities such as a bond issue.
D)by management to report the existence and effectiveness of the company's internal control over financial reporting.

Accepted Answer

Schedule 13D is required to be filed by an entity that acquires more than 5 percent of a class of registered equity securities. This filing is necessary to disclose the ownership details and intentions of the acquirer with respect to the target company.

Question 16

Which system helps the SEC accomplish its primary purpose of increasing the efficiency and fairness of the securities markets by expediting the receipt,acceptance,dissemination,and analysis of time-sensitive data filed with it?
A)EDI
B)ESEC
C)EDGAR
D)EMMA

Accepted Answer

EDGAR (Electronic Data Gathering, Analysis, and Retrieval system) is the system used by the U.S. Securities and Exchange Commission (SEC) to facilitate the submission and public dissemination of companies' filings with the SEC. It allows for the quick and efficient receipt, acceptance, analysis, and dissemination of time-sensitive data, which helps fulfill the SEC's primary purpose of promoting efficiency and fairness in the securities markets.

Question 17

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions
-Customary Review
A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Accepted Answer

The answer of Each of the following questions names an...

Question 18

According to the provisions of the Sarbanes-Oxley Act,
A)accounting firms can provide both audit and non-audit services to the same company.
B)the auditor should report directly to,and have its work overseen by,the company's management.
C)audit committees should be composed of non-management members of a company's board of directors.
D)both the lead audit partner and the audit review partner for publicly held companies should be rotated at least every two years.

Accepted Answer

The Sarbanes-Oxley Act requires that audit committees be composed entirely of independent, non-management members of a company's board of directors. This helps ensure the objectivity and independence of the audit process. Choices A, B, and D are incorrect statements.

Question 19

Which of the following statements concerning the management discussion and analysis (MD&A)of a company's financial condition is true?
I.It should cover the financial statements and other statistical data for the most recent three-year time span.
II.It should make year-to-year comparisons of material changes in the line items.
III.Management need not explain the cause(s)of the material changes.
IV.Disclosure of material off-balance sheet transactions,arrangements,and obligations is required in each annual and each quarterly report.
A)I,II,and IV
B)II and III
C)I,III,and IV
D)I,II,III,and IV

Accepted Answer

Statement I is true as MD&A should cover the financial statements and other statistical data for the most recent three-year time span. 
Statement II is true as MD&A should make year-to-year comparisons of material changes in the line items. 
Statement III is false as management must explain the cause(s) of the material changes. 
Statement IV is true as disclosure of material off-balance sheet transactions, arrangements, and obligations is required in each annual and each quarterly report. Therefore, options B and C are incorrect. 
Hence, the correct answer is A.

Question 20

Which of the following statements concerning Form 10-Q is NOT true?
A)It is filed for all four quarters.
B)It is the quarterly report to the SEC.
C)It contains an update on significant matters occurring since the last quarter.
D)It includes comparative financial statements for the quarter presented.

Accepted Answer

Form 10-Q is not filed for all four quarters, it is filed for the first three quarters of a company's fiscal year. The Form 10-K is the annual report that is filed for the fourth quarter.

Quiz 14: Sec Reporting

Which of the following statements concerning pro forma disclosures is not true?

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description. Descriptions -Comment Letter

Which of the following is defined as directly or indirectly having the power to vote the shares or investment power to sell the security?

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description. Descriptions -"Red Herring" Prospectus

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

Which of the following classes of information are included in the Form 10-K? I.Management's discussion and analysis II.Audited financial statements and footnotes III.Auditor's opinion on the company's internal control system

Accountants are liable for any materially false or misleading information contained in the registration statement filed with the SEC up to:

Pro forma disclosures are:

The SEC administers many laws and regulations governing the information made in files reports. Required: a)What is the difference in issues covered by Regulation S-X and Regulation S-K? b)How do the issues covered by these regulations differ from the AAERs and SABs?

What does an underwriter typically require from an accountant which indicates that the company has fulfilled all the accounting requirements in the registration process?

Proxy statements are:

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description. Descriptions -"Tombstone ad"

Information concerning the unexpected resignation of one or more of the registrant's directors would be disclosed on which of the following forms?

Schedule 13D is filed:

Which system helps the SEC accomplish its primary purpose of increasing the efficiency and fairness of the securities markets by expediting the receipt,acceptance,dissemination,and analysis of time-sensitive data filed with it?

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description. Descriptions -Customary Review

According to the provisions of the Sarbanes-Oxley Act,

Which of the following statements concerning Form 10-Q is NOT true?