Advanced Financial Accounting Quiz!
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Filings with the SEC are divided generally into two broad categories:
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Registration statements and periodic filings.
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Reconciliation statements and periodic filings.
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Registration filings and reconciliation statements.
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Registration statements and perpetual filings.
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Reconciliation filings and perpetual filings.
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This Advanced Financial Accounting Quiz assesses knowledge on SEC's regulatory roles, securities registration compliance, and accounting principles evolution. It's ideal for learners aiming to understand SEC operations and financial reporting standards.
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- 2.
Regulation S-K:
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Establishes requirements for nonfinancial information to be filed with the SEC.
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Prescribes the financial disclosure information that must be included in filings with the SEC.
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Controls the listing of securities by stock exchanges.
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Describes the internal controls a publicly traded company must maintain.
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Prescribes the form of financial statements to be filed with the SEC.
Correct Answer
A. Establishes requirements for nonfinancial information to be filed with the SEC.Explanation
The correct answer is "establishes requirements for nonfinancial information to be filed with the SEC." This is because Regulation S-K sets out the guidelines and requirements for companies to disclose nonfinancial information when filing with the Securities and Exchange Commission (SEC). It does not pertain to financial disclosure information, listing of securities, internal controls, or the form of financial statements.Rate this question:
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- 3.
EDGAR stands for:
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Explanatory Data Gathering, Analysis, and Retrieval System.
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Electronic Data, Gross Analysis, and Revenues System.
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Electronic Data Gathering, Analysis, and Retrieval System.
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Electronic Debits, Gains, Assets and Revenues System.
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Explanatory Debits, Gains, Assets and Revenues System.
Correct Answer
A. Electronic Data Gathering, Analysis, and Retrieval System.Explanation
The correct answer is "Electronic Data Gathering, Analysis, and Retrieval System." EDGAR is an electronic system that allows companies to submit their financial statements and other important documents to the U.S. Securities and Exchange Commission (SEC). It is used by investors, analysts, and the public to access and analyze this information. The other options do not accurately represent the purpose or function of EDGAR.Rate this question:
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- 4.
The audit committee of an entity subject to SEC regulation will do all of the following except:
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Sign certification of the annual financial statements.
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Approve nonaudit services provided by the independent audit firm.
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Be comprised only of individuals who are not members of management.
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Be responsible for agreeing to fee compensation of the independent audit firm.
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Serve as liaison between the board of directors and the independent audit firm.
Correct Answer
A. Sign certification of the annual financial statements.Explanation
The audit committee of an entity subject to SEC regulation is responsible for various tasks, including approving nonaudit services provided by the independent audit firm, being comprised only of individuals who are not members of management, being responsible for agreeing to fee compensation of the independent audit firm, and serving as a liaison between the board of directors and the independent audit firm. However, signing the certification of the annual financial statements is not a responsibility of the audit committee. This task is typically performed by management or executives within the entity.Rate this question:
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- 5.
When must Form 8-K be filed with the SEC?
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Within ninety days of the end of the fiscal year.
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When a relatively small company intends to issue securities.
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Within fifteen days of the occurrence of certain significant events.
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Within forty-five days of the end of any quarter other than the fourth quarter of the fiscal year.
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Within sixty days of the end of the fiscal year.
Correct Answer
A. Within fifteen days of the occurrence of certain significant events.Explanation
Form 8-K must be filed with the SEC within fifteen days of the occurrence of certain significant events. This form is used to inform investors and the public about important events that could have an impact on the company's financial condition or operations. These events include but are not limited to, changes in corporate governance, bankruptcy or receivership, material impairments, and departures of directors or principal officers. Filing within fifteen days ensures timely disclosure of these events to investors and helps maintain transparency in the financial markets.Rate this question:
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- 6.
The SEC's role in the initial registration of securities to be publicly issued is:
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To provide data to the public regarding first-time issuance of securities.
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To give permission to an independent CPA firm to audit the registrant's financial statements.
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To ensure that the content of the registration filing is in compliance with securities regulations.
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To make the registrant's annual report available for public viewing.
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To ensure that securities issued are quality investments.
Correct Answer
A. To ensure that the content of the registration filing is in compliance with securities regulations.Explanation
The SEC's role in the initial registration of securities to be publicly issued is to ensure that the content of the registration filing is in compliance with securities regulations. This means that the SEC reviews the registration filing to make sure that it contains all the necessary information and disclosures required by law. By doing so, the SEC helps to protect investors by ensuring that they have access to accurate and complete information about the securities being offered to the public.Rate this question:
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- 7.
A letter of comments would be issued by the SEC
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After receiving the company's Form 10-K.
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To indicate that a registration statement has been approved.
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To request clarification of a registration statement.
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In response to a company's filing of Form 8-K.
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To convey your pertinent comments to the SEC.
Correct Answer
A. To request clarification of a registration statement.Explanation
The correct answer is "to request clarification of a registration statement." This is because a letter of comments is typically issued by the SEC after receiving a company's Form 10-K in order to seek further clarification or address any concerns regarding the information provided in the registration statement.Rate this question:
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- 8.
The goals of the SEC include all except which one of the following?
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Prohibiting the dissemination of materially misstated information
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Regulating the operation of securities markets.
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Ensuring that full and fair information is disclosed to all investors before the securities of a company are allowed to be bought and sold.
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Controlling the number of companies whose stock is listed on major stock exchanges.
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Preventing the misuse of information especially by inside parties.
Correct Answer
A. Controlling the number of companies whose stock is listed on major stock exchanges.Explanation
The SEC's goals include prohibiting the dissemination of materially misstated information, regulating the operation of securities markets, ensuring that full and fair information is disclosed to all investors before the securities of a company are allowed to be bought and sold, and preventing the misuse of information especially by inside parties. However, controlling the number of companies whose stock is listed on major stock exchanges is not one of its goals.Rate this question:
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- 9.
Regulation S-X specifies:
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Requirements for the nonfinancial information to be filed with the SEC.
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The internal controls a publicly traded company must maintain.
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Which form a company must file to register new securities.
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The form and content of financial statements to be filed with the SEC.
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That the financial statements included in a company's annual report must be audited.
Correct Answer
A. The form and content of financial statements to be filed with the SEC.Explanation
Regulation S-X specifies the form and content of financial statements to be filed with the SEC. This means that it provides guidelines and requirements for how financial statements should be prepared and presented when submitting them to the SEC. It ensures that companies provide accurate and consistent financial information to the public and investors, promoting transparency and accountability.Rate this question:
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- 10.
Information required in proxy statements includes all except which of the following?
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Listing of company directors and executive officers.
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Two-year summary of industry segments, export sales, and foreign and domestic operations.
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Five-year summary of operations including sales, total assets, income from continuing operations, and cash dividends per share.
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Description of the business activities including principal products and sources and availability of raw materials.
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Market price of the company's common stock for each quarterly period within the two most recent fiscal years.
Correct Answer
A. Two-year summary of industry segments, export sales, and foreign and domestic operations.Explanation
Proxy statements are documents that are distributed to shareholders of a company before annual meetings. These statements provide important information about the company and its operations. The information required in proxy statements includes the listing of company directors and executive officers, a five-year summary of operations including sales, total assets, income from continuing operations, and cash dividends per share, a description of the business activities including principal products and sources and availability of raw materials, and the market price of the company's common stock for each quarterly period within the two most recent fiscal years. However, a two-year summary of industry segments, export sales, and foreign and domestic operations is not required to be included in proxy statements.Rate this question:
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- 11.
How has the SEC exercised its power with regard to the continuing evolution of accounting principles? (1) Issuing Financial Reporting Releases (FRRs). (2) Requiring additional disclosures in notes to financial statements. (3) Declaring a moratorium on the use of specified accounting practices. (4) Overruling the FASB.
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1,2,4
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1,3,4
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1,3
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1,2,3,4
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1,4
Correct Answer
A. 1,2,3,4Explanation
The SEC has exercised its power with regard to the continuing evolution of accounting principles by issuing Financial Reporting Releases (FRRs), requiring additional disclosures in notes to financial statements, declaring a moratorium on the use of specified accounting practices, and overruling the FASB. These actions demonstrate the SEC's active involvement in shaping and regulating accounting principles to ensure transparency and accuracy in financial reporting.Rate this question:
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- 12.
A proxy statement must be filed with the SEC at least how many days before being distributed?
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90
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70
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10
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30
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60
Correct Answer
A. 10Explanation
A proxy statement must be filed with the SEC at least 10 days before being distributed. This ensures that shareholders have enough time to review the information provided in the proxy statement before making any decisions or casting their votes. It also allows for transparency and fairness in the voting process, as shareholders have sufficient time to consider the matters being voted on and any accompanying materials.Rate this question:
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- 13.
A wrap-around filing:
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May be used by large companies to sell securities over a period of two years without refiling with the SEC.
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May remain in effect for a period of one to five years
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Is a filing completed using the SEC's electronic filing system.
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Allows a company to simplify its form 10-K by referring to information in its annual report.
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Is a simplified registration procedure for securities to be issued by small companies.
Correct Answer
A. Allows a company to simplify its form 10-K by referring to information in its annual report.Explanation
A wrap-around filing allows a company to simplify its form 10-K by referring to information in its annual report. This means that instead of duplicating information already provided in the annual report, the company can simply refer to that information in the form 10-K. This helps to streamline the filing process and reduce redundancy in the company's financial reporting.Rate this question:
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- 14.
Which one of the following registration statement forms are used by large issuers that already have at least $75 million voting stock held by nonaffiliates?
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S-1
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S-8
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S-11
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S-3
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S-4
Correct Answer
A. S-3Explanation
Large issuers that already have at least $75 million voting stock held by nonaffiliates use Form S-3 for registration statements. Form S-3 is a simplified form that allows these issuers to register securities offerings with the Securities and Exchange Commission (SEC). This form is commonly used by well-established companies that have already filed regular reports with the SEC and have a significant public float. It provides a more streamlined process for these issuers to offer and sell securities to the public.Rate this question:
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- 15.
Audited financial statements in an annual report of an issuer that is subject to SEC regulation must include:
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Three balance sheets, two income statements, and two statements of cash flows.
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Two balance sheets, two income statements, and two statements of cash flows.
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Two balance sheets, three income statements, and three statements of cash flows.
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One balance sheet, one income statement, and one statement of cash flows.
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Three balance sheets, three income statements, and three statements of cash flows.
Correct Answer
A. Two balance sheets, three income statements, and three statements of cash flows.Explanation
Audited financial statements in an annual report of an issuer that is subject to SEC regulation must include two balance sheets, three income statements, and three statements of cash flows. This is because the SEC requires comprehensive financial reporting to provide a clear and accurate picture of the issuer's financial position, performance, and cash flows. The inclusion of multiple balance sheets allows for the comparison of financial positions over time, while multiple income statements and statements of cash flows provide a more detailed analysis of the issuer's profitability and cash flow generation.Rate this question:
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- 16.
The SEC has usually restricted its role in establishing accounting principles to
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Developing accounting standards for particular industries.
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Specifying the information that should be included in interim financial statements.
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The promulgation and issuance of SASs (Securities Accounting Standards).
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Determining required disclosures.
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Developing definitions of key accounting terms.
Correct Answer
A. Determining required disclosures.Explanation
The correct answer is determining required disclosures. This is because the SEC's role in establishing accounting principles involves deciding what information companies must disclose in their financial statements. The SEC sets guidelines and regulations that dictate the specific disclosures that companies are required to make to ensure transparency and protect investors. By determining the required disclosures, the SEC helps to standardize financial reporting practices and ensure consistency in the information provided by companies to the public.Rate this question:
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- 17.
P Co. is preparing to issue stock. Its revenues for last year were $85,000,000, and it had $52,000,000 in stock held by nonaffiliates. The company had been filing with the SEC for eight years. Which one of the following forms should have been used for registration?
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S-3
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S-8
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S-4
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S-1
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S-11
Correct Answer
A. S-1Explanation
Based on the information provided, P Co. is preparing to issue stock for the first time, as it has been filing with the SEC for eight years. The S-1 form is typically used for the initial registration of securities, making it the correct choice in this scenario. The S-3 form is used for the registration of securities by companies that have been filing with the SEC for at least one year and meet certain eligibility requirements. S-8 is used for the registration of securities to be offered to employees under employee benefit plans. S-4 is used for the registration of securities in connection with business combinations and reorganizations. S-11 is used for the registration of securities issued by real estate investment trusts.Rate this question:
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- 18.
When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?
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The excess of fair value over book value since the date of acquisition is revalued for the change in exchange rate.
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The subsidiary's stockholders' equity accounts as of the beginning of the year are eliminated.
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The cumulative translation adjustment included in the Investment in Subsidiary account is eliminated.
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The allocations of excess of fair value over book value at the date of acquisition are eliminated.
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The amount of equity income recognized by the parent in the current year is eliminated .
Correct Answer
A. The allocations of excess of fair value over book value at the date of acquisition are eliminated.Explanation
When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, the allocations of excess of fair value over book value at the date of acquisition are not eliminated. The equity method requires that the parent company records its investment in the subsidiary at cost and subsequently adjusts it for its share of the subsidiary's earnings or losses. The excess of fair value over book value at the date of acquisition is not eliminated, as it represents the initial difference between the cost of investment and the subsidiary's net assets. Therefore, the statement that the allocations of excess of fair value over book value at the date of acquisition are eliminated is false.Rate this question:
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Current Version
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Aug 27, 2024Quiz Edited by
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Apr 24, 2012Quiz Created by
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