ACCOUNTING ACCT 521 Exam One>The SEC and Financial Reporting(WITH ANSWERS)100% Correct.

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Topic: Mission of the SEC LO 1 Which one of these statements best describes the principal mission of the SEC? a. To ensure the profitability and safety of investments offered to the public b. To p... romote efficient capital allocation by ensuring that securities markets function fairly and honestly c. To promulgate accounting and auditing standards d. To maintain a database useful in securities research ANS: b 2. Topic: Securities legislation LO 1 The Private Securities Litigation Reform Act of 1995 a. outlines the rights of bondholders and provides the appointment of an independent trustee to represent their rights. b. regulates open-end mutual funds and closed-end investment companies. c. increased penalties for violating insider trading rules. d. shields registrants from lawsuits concerning forward-looking financial information. ANS: d 3. Topic: Securities legislation LO 1 The Securities Act of 1933 a. established the Securities and Exchange Commission. b. regulates investment companies. c. regulates the public offering of securities. d. requires monitoring of auditing firms. ANS: c © Cambridge Business Publishers, 2016 16-2 Advanced Accounting, 3rd Edition 4. Topic: Securities legislation LO 1 Regulations for trading in securities that are issued and outstanding are found in the: a. Securities Act of 1933. b. Securities Act of 1934. c. Investment Company Act of 1940. d. Trust Indenture Act of 1940. ANS: b 5. Topic: Securities legislation LO 1 The Foreign Corrupt Practices Act of 1977 includes all of these provisions except: a. Penalties for violating insider trading rules were increased. b. Provisions to prevent companies from making illegal payments. c. Companies must maintain accurate accounting records. d. Companies must maintain a system of effective internal accounting controls. ANS: a 6. Topic: Securities legislation LO 1 The Emergency Economic Recovery and Stabilization Act of 2008 a. allowed the government to bail out banks and other organizations. b. temporarily banned short sales. c. provided investors with insurance against credit crisis investment losses. d. suspended fair value accounting for investments. ANS: a 7. Topic: Securities legislation LO 1 The Dodd-Frank Act of 2010 expanded the SEC’s role in monitoring a. the issuance of debt securities. b. accounting standards. c. financial services markets. d. auditing firms. ANS: c © Cambridge Business Publishers, 2016 Test Bank, Chapter 16 16-3 8. Topic: PCAOB LO 1 What is the primary mission of the PCAOB? a. Identify and prosecute those who manipulate accounting earnings. b. Establish audit standards and monitor auditing firms. c. Develop generally accepted accounting principles for public companies. d. Develop the regulations that publicly traded companies must follow. ANS: b 10. Topic: Definition of a security LO 1 Which of the following is not exempt from the SEC's registration and reporting rules? a. Commercial paper b. Securities issued by not-for-profit organizations c. Commodity option contracts d. Local government bonds ANS: c [Show More]

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