The Primary Responsibility of Security and Exchange Commissions with Respect

question 72

Multiple Choice

The primary responsibility of security and exchange commissions with respect to financial statements is to

• A) set generally accepted accounting principles (GAAP), which must be followed in their preparation.
• B) review accounting choices made by companies in their financial statements to ensure decision-making logic is sound.
• C) monitor financial statements to ensure full and plain disclosure of material information, thus maintaining compliance with listing requirements.
• D) monitor and analyze the information looking for signs of an improved or weakened financial condition.

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Definitions:

Factoring with Recourse

A financial transaction where a business sells its accounts receivable to a third party (factor) but remains responsible if the debtor does not pay.

Sales Return

Goods returned by the buyer to the seller due to issues like defects or dissatisfaction, reversing a portion of sales.

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Interest-Bearing Note

A debt instrument that requires the issuer to pay interest to the holder at specified intervals up to the maturity date, when the principal amount is due to be repaid.