Question 1

10-K reports are:

Accepted Answer

A)  the quarterly reports to stockholders. 
B)  quarterly filings made by a company with the SEC. 
C)  annual filings made by a company with SEC. 
D)  filings made by a company with SEC when a company changes auditors. 
A)  the quarterly reports to stockholders. 
B)  quarterly filings made by a company with the SEC. 
C)  annual filings made by a company with SEC. 
D)  filings made by a company with SEC when a company changes auditors.

Question 2

Which of the following information would not be filed with the SEC by a publicly traded company?

Accepted Answer

A)  10-K report 
B)  Prospectus 
C)  Proxy statement 
D)  Tax return 
A)  10-K report 
B)  Prospectus 
C)  Proxy statement 
D)  Tax return

Question 3

Which of the following would require the filing of Form 8-K?
I. Major acquisition
II. Audited financial statements
III. Bankruptcy
IV. Change in management control

Accepted Answer

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

Question 4

Accounting distortions arise from the nature of accrual accounting.

Accepted Answer

A) True 
 B)False

Question 5

GAAP stands for General American Accounting Principles, and must be adhered to by publicly traded companies when preparing their financial statements.

Accepted Answer

A) True 
 B)False

Question 6

Problem One: Motivation to Manipulate Financial Results
There are many ways in which the management of a company can manage the reported earnings. Give three reasons why management may want to manage earnings being sure to explain your answer in full.

Accepted Answer

(a) Contracting incentives:
Many contrac

Question 7

Problem Four: Discretionary Expenditures
Discretionary expenditures are outlays that management can vary across periods to conserve resources and/or manage earnings. Give three examples and explain their potential impact on earnings quality when analyzing a company.

Accepted Answer

Advertising, selling and marketing expen

Question 8

The two primary qualities of accounting information to make it useful for decision making are:

Accepted Answer

A)  reliability and comparability. 
B)  relevance and reliability. 
C)  materiality and comparability. 
D)  full disclosure and relevance. 
A)  reliability and comparability. 
B)  relevance and reliability. 
C)  materiality and comparability. 
D)  full disclosure and relevance.

Question 9

Accounting standards issued by the SEC are applicable to all US companies being audited.

Accepted Answer

A) True 
 B)False

Question 10

When analyzing financial statements it is important to recognize that accounting distortions can arise. Accounting distortions are those things that cause deviations in accounting information from the underlying economics. Which of the following statements is not correct? Accounting distortions:

Accepted Answer

A)  can arise as management may deliberately manipulate financial statements. 
B)  arise often through application of (correct) accounting principles. 
C)  can affect the quality of earnings. 
D)  arise if the stock market is not efficient. 
A)  can arise as management may deliberately manipulate financial statements. 
B)  arise often through application of (correct) accounting principles. 
C)  can affect the quality of earnings. 
D)  arise if the stock market is not efficient.

Question 11

Voluntary disclosure by managers is becoming an increasingly important source of information. Which of the following is least likely to be a reason for this increased disclosure?

Accepted Answer

A)  Protection under Safe Harbor Rules. 
B)  To manage investors' expectations. 
C)  To signal information to investors. 
D)  To respond to increased demands by labor unions. 
A)  Protection under Safe Harbor Rules. 
B)  To manage investors' expectations. 
C)  To signal information to investors. 
D)  To respond to increased demands by labor unions.

Question 12

Which of the following are changes in accounting principle?
I. A change from LIFO to FIFO.
II. A change in estimated salvage value of depreciable asset.
III. A change from an accelerated depreciation method to straight line depreciation.
IV. Recording depreciation for the first time on machinery purchased five years ago.

Accepted Answer

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

Question 13

Net income is usually higher than free cash flows.

Accepted Answer

A) True 
 B)False

Question 14

For a going concern, company value can be expressed by:

Accepted Answer

A)  dividing permanent income by the cost of capital. 
B)  multiplying permanent income by the cost of capital. 
C)  dividing permanent income by the market value per share. 
D)  multiplying permanent income by the market value per share. 
A)  dividing permanent income by the cost of capital. 
B)  multiplying permanent income by the cost of capital. 
C)  dividing permanent income by the market value per share. 
D)  multiplying permanent income by the market value per share.

10-K reports are:

Which of the following information would not be filed with the SEC by a publicly traded company?

Which of the following would require the filing of Form 8-K? I. Major acquisition II. Audited financial statements III. Bankruptcy IV. Change in management control

Accounting distortions arise from the nature of accrual accounting.

GAAP stands for General American Accounting Principles, and must be adhered to by publicly traded companies when preparing their financial statements.

Problem One: Motivation to Manipulate Financial Results There are many ways in which the management of a company can manage the reported earnings. Give three reasons why management may want to manage earnings being sure to explain your answer in full.

Problem Four: Discretionary Expenditures Discretionary expenditures are outlays that management can vary across periods to conserve resources and/or manage earnings. Give three examples and explain their potential impact on earnings quality when analyzing a company.

The two primary qualities of accounting information to make it useful for decision making are:

Accounting standards issued by the SEC are applicable to all US companies being audited.

When analyzing financial statements it is important to recognize that accounting distortions can arise. Accounting distortions are those things that cause deviations in accounting information from the underlying economics. Which of the following statements is not correct? Accounting distortions:

Voluntary disclosure by managers is becoming an increasingly important source of information. Which of the following is least likely to be a reason for this increased disclosure?

Net income is usually higher than free cash flows.

For a going concern, company value can be expressed by:

Overview of Financial Statement Analysis

Analyzing Financing Activities

Analyzing Investing Activities

Analyzing Investing Activities: Intercorporate Investments

Analyzing Operating Activities

Cash Flow Analysis

Return on Invested Capital and Profitability Analysis

Prospective Analysis

Credit Analysis

Equity Analysis and Valuation

Filters

Exam 2: Financial Reporting and Analysis

10-K reports are:

Which of the following information would not be filed with the SEC by a publicly traded company?

Which of the following would require the filing of Form 8-K? I. Major acquisition II. Audited financial statements III. Bankruptcy IV. Change in management control

Accounting distortions arise from the nature of accrual accounting.

GAAP stands for General American Accounting Principles, and must be adhered to by publicly traded companies when preparing their financial statements.

Problem One: Motivation to Manipulate Financial Results There are many ways in which the management of a company can manage the reported earnings. Give three reasons why management may want to manage earnings being sure to explain your answer in full.

Problem Four: Discretionary Expenditures Discretionary expenditures are outlays that management can vary across periods to conserve resources and/or manage earnings. Give three examples and explain their potential impact on earnings quality when analyzing a company.

The two primary qualities of accounting information to make it useful for decision making are:

Accounting standards issued by the SEC are applicable to all US companies being audited.

When analyzing financial statements it is important to recognize that accounting distortions can arise. Accounting distortions are those things that cause deviations in accounting information from the underlying economics. Which of the following statements is not correct? Accounting distortions:

Voluntary disclosure by managers is becoming an increasingly important source of information. Which of the following is least likely to be a reason for this increased disclosure?

Net income is usually higher than free cash flows.

For a going concern, company value can be expressed by:

Overview of Financial Statement Analysis

Analyzing Financing Activities

Analyzing Investing Activities

Analyzing Investing Activities: Intercorporate Investments

Analyzing Operating Activities

Cash Flow Analysis

Return on Invested Capital and Profitability Analysis

Prospective Analysis

Credit Analysis

Equity Analysis and Valuation

Filters