16. Which of the following forms is the most comprehensive registration statement?
A. Form S-1
B. Form F-2
C. Form S-3
D. Form S-2
17. When deficiencies are found in a registration statement that must be corrected before the securities may be offered for sale, which of the following is issued by the SEC?
A. An audit opinion
B. A comment letter
C. A customary review
D. A comfort letter
18. The purpose of a “tombstone ad” is:
A. to inform investors an upcoming offering has been canceled.
B. to inform investors of an upcoming offering.
C. to inform investors an upcoming offering will be delayed for 30 days.
D. to inform investors securities will be offered for sale after the company has responded to the SEC’s comment letter.
19. Which of the following best describes a “red herring” prospectus?
A. A shortened version of registration Form S-1 available to those companies that already have publicly traded securities.
B. A prospectus containing material irregularities and deficiencies.
C. Preliminary information provided to investors about an upcoming issue, and issued between the time a registration statement is presented to the SEC and its effective date.
D. Disclosure in the business press, outlined in red, informing investors of an upcoming offering.
20. 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.
21. 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.
22. 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
23. 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 prepared in accordance with APB 28.
24. Information concerning the unexpected resignation of one or more of the registrant’s directors would be disclosed on which of the following forms?
I. Form 8-Q
II. Form 8-K
A. I
B. II
C. Both I and II
D. Neither I nor II
25. 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.
26. 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.
27. 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
28. 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 II
C. I and III
D. I, II, and III
29. 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.
30. 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
