3. Which of the following best describes a "red herring" prospectus?

A shortened version of registration Form S-1 available to those companies that already have publicly traded securities.

A prospectus containing material irregularities and deficiencies.

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.

Disclosure in the business press, outlined in red, informing investors of an upcoming offering.

2. In the issuer's annual report, how many years of audited financial statements must be presented?

I. Three years of audited income statements II. Two years of audited balance sheets III. Three years of audited statements of cash flows

I and II

II and III

I and III

I, II, and III

4. 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

I and II

I and III

II and III

I, II, and III

5. 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

I

II

Both I and II

Neither I nor II

6. Proxy statements are:

filed by an entity that acquires a beneficial ownership of more than 5 percent in a company.

interim financial statements need not be audited.

materials submitted to shareholders for votes on corporate matters.

used to disclose unscheduled material events.

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

Proxy

Significant influence

Control

Beneficial ownership

8. According to the provisions of the Sarbanes-Oxley Act,

accounting firms can provide both audit and non-audit services to the same company.

the auditor should report directly to, and have its work overseen by, the company's management.

audit committees should be composed of non-management members of a company's board of directors.

both the lead audit partner and the audit review partner for publicly held companies should be rotated at least every two years.

9. 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.

I, II, and IV

II and III

I, III, and IV

I, II, III, and IV

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

They show the effects of major transactions that occur after the end of the fiscal period.

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.

The SEC requires these to be presented only when the company has made an unusual asset exchange, or a restructuring of existing indebtedness.

They often take the form of summarized financial statements.