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Pub companyReporting
| Question | Answer |
|---|---|
| Which act created the SEC and governs periodic reporting? | The Securities Exchange Act of 1934 (regulates trading of securities after issuance) |
| Which act governs the issuance/registration of new securities? | The Securities Act of 1933 (Form S-1) |
| Who has the authority to set U.S. GAAP, and who actually sets it? | The SEC has the authority but delegated standard setting to the FASB; the SEC retains enforcement power |
| What does the SEC do when it determines a firm reported in violation of GAAP? | Sends a deficiency letter; if unresolved it can halt trading of the securities, and the DOJ may file criminal charges |
| What is the SEC's stated mission? | Protect investors, maintain fair orderly and efficient markets, and facilitate capital formation |
| When must a company register its securities with the SEC? | $10 million or more in assets AND 2,000 or more shareholders (or 500 or more nonaccredited), OR securities traded on a national exchange or OTC market |
| What is Form S-1 and when is it filed? | The registration statement that registers shares on a national exchange; filed prior to the initial public offering |
| What does Form 10-Q report and how often is it filed? | Quarterly financial performance and disclosures; filed for the first three quarters only (Q4 is covered by the 10-K) |
| Are the financial statements in Form 10-Q audited? | No, they are REVIEWED. Only the 10-K contains audited financial statements |
| What does Form 10-K report? | A comprehensive annual picture of the business, risks, and performance, including audited financial statements; filed after the fourth quarter |
| What does Form 8-K report and what is its deadline? | Significant/material events, filed within 4 BUSINESS days of the event |
| Give four events that trigger an 8-K. | Entering into or terminating a material agreement, bankruptcy, acquisition or disposal of assets, change in directors CEO or auditor |
| 10-K filing deadlines by filer type? | 60 days large accelerated, 75 days accelerated, 90 days nonaccelerated |
| 10-Q filing deadlines by filer type? | 40 days for large accelerated and accelerated filers, 45 days for nonaccelerated filers |
| What makes a company a large accelerated filer? | Market value of outstanding securities of $700 million and up |
| What makes a company an accelerated filer that is not an SRC? | Market value of outstanding securities of $250M to $700M with annual revenues of $100M and up |
| What are the two tests for a smaller reporting company (SRC)? | Public float under $250 million, OR public float under $700 million with annual revenues under $100 million |
| What is public float? | Equity held by nonaffiliated investors |
| What reporting benefit does SRC status provide? | The SEC requires fewer disclosures from smaller reporting companies |
| Which item of the 10-Q contains the financial statements? | Part I, Item 1 |
| Which item of the 10-Q contains MD&A? | Part I, Item 2 |
| Which item of the 10-Q contains quantitative and qualitative disclosures about market risk? | Part I, Item 3 |
| Which item of the 10-Q covers controls and procedures? | Part I, Item 4 |
| Which item of the 10-K contains MD&A? | Part II, Item 7 |
| Which item of the 10-K contains quantitative and qualitative disclosures about market risk? | Part II, Item 7A |
| Which item of the 10-K contains the financial statements and supplementary data? | Part II, Item 8 |
| How does the ordering of the three main sections differ between the 10-Q and the 10-K? | Same three sections, different order: 10-Q runs 1-2-3 (F/S first), 10-K runs 7-7A-8 (MD&A first, F/S last) |
| Which periods of financial statements are required in the 10-K? | Two years of balance sheets; three years of income statements, cash flows, and comprehensive income |
| Which balance sheets are presented in a 10-Q? | The current quarter end and the prior fiscal year end |
| Which income statements are presented in a 10-Q? | Quarterly and year-to-date for this quarter, plus the same periods in the prior year |
| Which statements of cash flow are presented in a 10-Q? | Cumulative year-to-date for the current and prior fiscal years |
| How is internal control effectiveness reported in the 10-Q vs the 10-K? | Management evaluates effectiveness annually in the 10-K; the 10-Q reports only CHANGES in controls likely to have a material effect since the prior report |
| What is the basic EPS formula? | (Net income minus preferred stock dividends) divided by weighted average number of common shares outstanding |
| What is a simple capital structure vs a complex capital structure? | Simple = only common and nonconvertible preferred, reports basic EPS only. Complex = outstanding options or convertible securities, reports both basic and diluted EPS |
| How are preferred dividends handled for CUMULATIVE preferred stock in basic EPS? | Subtract the current-year annual dividend whether declared or not, paid or not; ignore dividends in arrears (only one year is ever subtracted) |
| How are preferred dividends handled for NONCUMULATIVE preferred stock? | Subtract only dividends actually declared |
| How are shares issued or reacquired during the year treated in the weighted average? | Prorated for the portion of the year they were outstanding |
| How are stock splits and stock dividends treated in the weighted average? | Retroactively, as if they occurred at the beginning of the earliest period presented, because they do not change resources or ownership percentages |
| When is a potential common share antidilutive? | When including it INCREASES EPS; antidilutive securities are ignored in the diluted EPS calculation |
| When are stock options dilutive? | When the exercise price is LOWER than the average market price; if exercise price exceeds market price they are antidilutive and excluded |
| What are the three steps of the treasury stock method? | 1) Assume all options are exercised, 2) Purchase treasury shares with the proceeds at average market price, 3) Add the incremental shares to the denominator |
| What is the incremental share formula under the treasury stock method? | Options minus (Options times exercise price divided by average market price); the numerator is unchanged |
| Under the if-converted method, what is added back for convertible PREFERRED stock? | The convertible preferred dividends are added back to the numerator, and the conversion shares are added to the denominator |
| Under the if-converted method, what is added back for convertible BONDS? | Interest expense times (1 minus the tax rate), plus the conversion shares in the denominator |
| Why is bond interest expense not always face value times the stated rate? | Amortization of a premium decreases interest expense and amortization of a discount increases it |
| What conversion date is used for convertible securities outstanding at the beginning of the earliest period presented? | The beginning of the earliest period reported; those shares are NOT prorated |
| What conversion date is used for convertible securities issued during the year? | The date of issuance, and the shares are prorated from that date |
| Where are basic and diluted EPS reported for income from continuing operations? | Both are reported on the face of the income statement |
| Where may EPS for discontinued operations be reported? | Either on the face of the income statement or in the notes |
| Do actual common stock dividends paid reduce EPS? | No, EPS indicates the amount of dividends that COULD have been paid regardless of dividends actually paid |
Created by:
KYLE69420