Financial Reporting & Disclosure Flashcards
7 cards from real CIRO practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Reporting & Disclosure flashcards as text
Under GAAP, which criterion must be met for a segment to be separately reportable under ASC 280?
Answer: The segment meets any one of three quantitative thresholds: 10% of revenue, profit/loss, or assets
ASC 280 requires separate disclosure of an operating segment if it meets any one of three 10% tests: revenue, reported profit or loss, or combined assets.
What is the significance of the 'going concern' assessment in financial reporting?
Answer: It evaluates whether a company can continue operations for at least 12 months from the financial statement issuance date
Under ASC 205-40, management must evaluate whether substantial doubt exists about the entity's ability to continue as a going concern for one year after the financial statements are issued.
In the context of fair value measurement under ASC 820, a Level 3 input is best described as:
Answer: Unobservable inputs based on the entity's own assumptions
Level 3 inputs are unobservable and reflect the entity's own assumptions about what market participants would use to price the asset or liability.
Which document must an IR officer review to ensure the company's proxy statement complies with SEC disclosure rules?
Answer: Regulation S-K
Regulation S-K prescribes the non-financial statement disclosure requirements for SEC filings, including proxy statements covering executive compensation, governance, and other narrative disclosures.
A company has a significant subsequent event that occurs after the balance sheet date but before the financial statements are issued. Under ASC 855, a 'recognized' subsequent event requires:
Answer: Adjustment to the financial statements to reflect new information about conditions that existed at the balance sheet date
Recognized subsequent events provide additional evidence about conditions that existed at the balance sheet date and require adjustments to the financial statements themselves.
Under the SEC's accelerated filer category, a large accelerated filer must file its 10-K within how many days after fiscal year end?
Answer: 60 days
Large accelerated filers (public float ≥ $700 million) must file their 10-K within 60 days after fiscal year end.
What does 'materiality' mean in the context of financial reporting disclosures?
Answer: Information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision
The SEC and courts have defined materiality as information that a reasonable investor would consider significant in making an investment decision, which is inherently a qualitative and quantitative judgment.