Chapter 02 Financial Reporting and Analysis Answer Key Multiple Choice Questions 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 AI a n d III BII a n d IV CI, III , a n d IV DI, II, III, a n d IV 2-1 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Which of the following is considered part of GAAP? A St at e m en ts of Fin an cia l Ac co un tin g St an da rd s (S FA S) B Int er na tio na l Ac co un tin g St an da rd s (IA S) 2-2 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education C Int er na tio na l Fin an cia l Re po rti ng St an da rd s (IF RS ) D Int er na l Re ve nu e Se rvi ce s (IR S) 2-3 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Which of the following is not considered a monitoring mechanism? A Th e Se cu riti es an d Ex ch an ge Co m mi ssi on (S EC ) B To p le ve l m an ag e m en t 2-4 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education C Th e bo ar d of dir ec tor 's au dit co m mi tte e D Th e ex te rn al au dit or s 2-5 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Which of the following statements about directors of a company is true? A Dir ec tor s ar e el ec te d by m an ag e m en t of a co m pa ny 2-6 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education B Dir ec tor s on ly ge t pa id if th e co m pa ny inc re as es its pr ofi ta bili ty th at ye ar 2-7 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education C Di re ct or s ar e sh ar eh ol de rs' re pr es en tat iv es 2-8 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education D All dir ec tor s of a co m pa ny ar e se ni or m an ag er s in th at co m pa ny 2-9 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Which of the following statements about accruals is true? A Ac cr ua l in co m e is les s rel ev an t th an ca sh flo w B Ac cr ua ls ca nn ot be m an ip ul at ed 2-10 Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education