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Question 1 of 10
1. Question
If an audited financial and/or operational report was not filed, which of the following requirements must be complied by the member?
Correct
Under the FINRA Rule 4140, audited financial and/or operational reports must be filed on a prescribed schedule. If a member fails to file it on a timely basis, he/she is subject to a late fee of $100 for each day when such a report is not filed for which a member may request for extension of time to be submitted at least three business days prior to the due date.
Incorrect
Under the FINRA Rule 4140, audited financial and/or operational reports must be filed on a prescribed schedule. If a member fails to file it on a timely basis, he/she is subject to a late fee of $100 for each day when such a report is not filed for which a member may request for extension of time to be submitted at least three business days prior to the due date.
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Question 2 of 10
2. Question
Which of the following may be considered a Material Associated Person (MAP)?
I. Affiliates
II. Associated persons
III. Natural persons
IV. ShareholdersCorrect
Under the SEA Rule 15c, Material Associated Person must have an impact on the financial or operational conditions of a broker or dealer. These include affiliates and associated persons that are hugely related to financing and operating activities.
Incorrect
Under the SEA Rule 15c, Material Associated Person must have an impact on the financial or operational conditions of a broker or dealer. These include affiliates and associated persons that are hugely related to financing and operating activities.
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Question 3 of 10
3. Question
Which of the following qualifications would lead a broker/dealer to an exemption of the treasury’s rule?
I. If a broker/dealer does not carry customer accounts regardless of the amount of capital maintained
II. If a broker/dealer maintains capital of less than $20 million but does not carry customer accounts.
III. If a broker/dealer maintains a capital of less than $250,000 but carries customer accounts
IV. If a broker/dealer maintains a capital of less than $250,000 but does not carry customer accountsCorrect
In relation to a broker/dealer’s exemption in the treasury’s rules, he or she must maintain the capital of less than $20 million and does not carry customer accounts, or capital of less than $250,000 regardless if it carries customer accounts or not. However, a broker/dealer in Section 15c is not subject to treasury’s risk assessment rules if it has no affiliates or holding company.
Incorrect
In relation to a broker/dealer’s exemption in the treasury’s rules, he or she must maintain the capital of less than $20 million and does not carry customer accounts, or capital of less than $250,000 regardless if it carries customer accounts or not. However, a broker/dealer in Section 15c is not subject to treasury’s risk assessment rules if it has no affiliates or holding company.
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Question 4 of 10
4. Question
In the financial reporting of currency and foreign transactions, which of the following requirements must be complied with?
I. Same records must be preserved for same time periods
II. Same records must be preserved for different time periods
III. Same records must be preserved for a longer period of time
IV. Same records must be preserved for a shorter period of timeCorrect
Under the SEA Rule 17a-8, in recording currency and foreign transactions, different time periods in a longer period of time is the time required in preserving these transactions. A broker or dealer must also comply with recordkeeping requirements under Part 103 of the Code of Federal Regulations.
Incorrect
Under the SEA Rule 17a-8, in recording currency and foreign transactions, different time periods in a longer period of time is the time required in preserving these transactions. A broker or dealer must also comply with recordkeeping requirements under Part 103 of the Code of Federal Regulations.
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Question 5 of 10
5. Question
Which of the following best describes an independent accountant?
Correct
Under the SEA Rule 17a-5, direct financial interest or material indirect financial interest must be avoided by an accountant in order for them to be considered as “independent”. An independent accountant must be familiarized with the Code of Ethics of professional accountants where they must not build close business relationships with a client, or even their relatives. These would free them from bias and conflicts of integrity.
Incorrect
Under the SEA Rule 17a-5, direct financial interest or material indirect financial interest must be avoided by an accountant in order for them to be considered as “independent”. An independent accountant must be familiarized with the Code of Ethics of professional accountants where they must not build close business relationships with a client, or even their relatives. These would free them from bias and conflicts of integrity.
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Question 6 of 10
6. Question
Which of the following is included in the preparation of the unaudited condensed financial statements?
I. All normal recurring adjustments necessary for a fair presentation for six months
II. All human resources financing information
III. Statements of operations and cash flow for six months
IV. Strengths, weaknesses, opportunities, and threats of an entityCorrect
All financial statements regardless of which is audited or not does not include human resources information and the SWOT Analysis of an entity. These are reported by the management team and not by the financing team which needs to be audited by an auditor.
Incorrect
All financial statements regardless of which is audited or not does not include human resources information and the SWOT Analysis of an entity. These are reported by the management team and not by the financing team which needs to be audited by an auditor.
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Question 7 of 10
7. Question
Which of the following is excluded in net capital requirements for brokers or dealers?
Correct
According to SEA Rule 15c3-1, an additional net capital requirement is increased by “one” percent of accrued liabilities. Other requirements relating moment to moment net capital is to maintain sufficient net capital in compliance with the haircut requirements and purchasing or selling proprietary securities.
Incorrect
According to SEA Rule 15c3-1, an additional net capital requirement is increased by “one” percent of accrued liabilities. Other requirements relating moment to moment net capital is to maintain sufficient net capital in compliance with the haircut requirements and purchasing or selling proprietary securities.
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Question 8 of 10
8. Question
In electronic filing requirements under Finra Rule 1010, who is not qualified in filing the forms?
Correct
In electronic filing for forms, one of the supervisory requirements is to provide an electronic acknowledgment that he is filing the information on behalf of the member’s associated persons. Without these, a corporate officer or a registered principal may not proceed with the electronic filing.
Incorrect
In electronic filing for forms, one of the supervisory requirements is to provide an electronic acknowledgment that he is filing the information on behalf of the member’s associated persons. Without these, a corporate officer or a registered principal may not proceed with the electronic filing.
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Question 9 of 10
9. Question
In adopting a retroactive application of changes in accounting principles required by the broker-dealers, which of the following must be applied?
Correct
According to the SEA Rule 17a-5, previous files of FOCUS Reports, which are affected by the retroactive application of changes in accounting principles, need not be restated or recalculated as long as its preparations are with the accordance of generally accepted accounting principles. However, adjustments in retained earnings must be seen in the Statement of Changes in Owners Equity.
Incorrect
According to the SEA Rule 17a-5, previous files of FOCUS Reports, which are affected by the retroactive application of changes in accounting principles, need not be restated or recalculated as long as its preparations are with the accordance of generally accepted accounting principles. However, adjustments in retained earnings must be seen in the Statement of Changes in Owners Equity.
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Question 10 of 10
10. Question
In a financial report, which of the following information must not be attached by the broker or dealer?
Correct
Under the SEA Rule 17a-5(e), an oath or affirmation must be attached by the broker or dealer that the financial report is true or correct. It must also indicate that a broker or dealer, officer, or director does not have a proprietary interest in the customer’s account. This oath or affirmation must be made by the proprietor, general partner, or authorized officer depending on an entity’s form.
Incorrect
Under the SEA Rule 17a-5(e), an oath or affirmation must be attached by the broker or dealer that the financial report is true or correct. It must also indicate that a broker or dealer, officer, or director does not have a proprietary interest in the customer’s account. This oath or affirmation must be made by the proprietor, general partner, or authorized officer depending on an entity’s form.