QUESTION: 1973

Form 10-K is filed with the SEC to update the information a company supplied when filing a registration statement under the Securities Exchange Act of 1934. Form 10-K is a report that is filed

semiannually within 30 days of the end of a company's second and fourth fiscal quarters.
quarterly within 45 days of the end of each quarter.
within 15 days of the occurrence of significant events.
none of these answers.
annually within 90 days of the end of a company's fiscal year.

Answer(s): E

Explanation:

Form 10-K is the annual report to the SEC. It must be filed within 90 days after the corporation's yearend. It must contain audited statements.

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QUESTION: 1974

A thorough analysis of financial statements should include an examination of which of the following sources of information?

All of these are correct.
The report of the independent external auditor.
Management's discussion and analysis of its financial condition and results of operation.
Form 10-K reports.
Explanatory footnotes that accompany financial statements.

Answer(s): A

Explanation:

All of these statements are correct. Management's discussion and analysis, footnotes and Form 10-K reports provide important details as to the company's balance sheet, income statement and overall financial condition; auditors reports will indicate if the financial information that is presented complies with generally accepted accounting principles.

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QUESTION: 1975

When a firm's inventory undergoes LIFO liquidation under rising prices, it experiences ________.

higher income and higher cash flows
higher income and lower cash flows
lower income and lower cash flows
lower income and higher cash flows

Answer(s): B

Explanation:

In LIFO liquidation under rising prices, the quantity of goods purchased during a period is less than the quantity sold. This leads to a sale of goods purchased in prior periods at lower prices (since prices are rising). This understates the cost-of-goods-sold (COGS), thus overstating the income and causing higher taxes than in the absence of the LIFO liquidation. The higher taxes cause a higher cash outflow. (This is an extremely important topic that you should be completely familiar with)

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QUESTION: 1976

Which of the following is considered a characteristic of equity?

None of these answers.
All forms of equity must ultimately be repaid by a business.
Compensation to the holders of equity takes precedence over that required to the holders of liabilities.
Equity represents the residual ownership of a business.
Equity represents a claim against a business that is senior to liabilities.

Answer(s): D

Explanation:

Equity refers to the claims of the owners of a business. Equity investors expose themselves to greater risk than the holders of liability claims because owner's claims are junior to liability instruments. Equity claims against income and assets are last in line; thus, they are residual.

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Free CFA-Level-I Exam Braindumps (page: 494)

QUESTION: 1973

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QUESTION: 1974

Explanation:

QUESTION: 1975

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QUESTION: 1976

Explanation: