Is reducing Research and Development ("R&D") expense always a positive?

Question 1 options:

	It depends.
	Yes, always because reducing an expense improves margins.
	R&D should be either consistent or increasing from one year to the next.
	No, R&D is critical to a firm and should rarely/never be reduced.

Question 2 (11 points)

What items are included in the notes to the financial statements?

Question 2 options:

	Summary of accounting policies.
	Changes in accounting policies, if any.
	Detail about particular accounts.
	All of the above

Question 3 (11 points)

The Statement of Other Comprehensive Income ("Income Statement #2") is:

Question 3 options:

	An income statement reported separately
	Not a real statement
	A section of the "MD&A"
	Disclosed only in the footnotes

Question 4 (11 points)

What is the accrual basis of accounting?

Question 4 options:

	Recognition of revenue when it is received in cash
	Recognition of revenue in the accounting period when the sale is made rather than when cash is received
	Matching expenses with revenue in the appropriate accounting period.
	Both B and C

Question 5 (11 points)

Which of the following may be omitted from the financial statements and the accompanying reports of public companies?

Question 5 options:

	Five-Year summary of selected data
	Financial results (e.g., Sales Revenue) separated by business segments
	Reputation of the company among its customers
	Both B and C

Question 6 (11 points)

Which of the following is not considered an audit opinion?

Question 6 options:

	Unqualified Opinion
	Qualified Opinion
	Adverse Opinion
	Disclaimer Opinion
	All of the above are considered opinions

Question 7 (11 points)

What information can be found in a proxy statement?

Question 7 options:

	Information on voting procedures
	Information on executive compensation
	Information on the breakdown of audit and non-audit fees paid to the audit firm.
	All of the above

Question 8 (11 points)

What does Section 404 of the Sarbanes-Oxley Act of 2002 require?

Question 8 options:

	A statement by the company regarding the effectiveness of internal controls and a disclosure of any material weaknesses in a firm's internal control system.
	A ten-year jail sentence and $1million fine for violations of the act.
	Auditor independence, which prohibits audit firms from offering any services other than audit services.
	Rotation of audit partners every five years.

Question 9 (11 points)

Which of the following are methods by which management can manipulate earnings and possibly lower the quality of reported earnings?

Question 9 options:

	Changing an accounting policy
	Ignoring inventory reported on the balance sheet that is obsolete
	Decreasing discretionary expenses
	All of the above

Question 10 (11 points)

Saved

Which report includes a description of company or industry trends

Question 10 options:

	The Footnotes
	The Proxy
	The "MD&A"
	Both A and C