Practice Test Geeks(CEP) Certified Equity Professional Practice Test
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Financial Analysis & Reporting Flashcards

7 cards from real CEP 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 Analysis & Reporting flashcards as text

  1. Which accounting standard governs the financial reporting of share-based payment transactions under IFRS?

    Answer: IFRS 2

    IFRS 2 Share-based Payment governs the recognition and measurement of share-based transactions, including employee stock options and other equity awards.

  2. A company uses the graded vesting attribution method for an award with three annual tranches. How does this differ from straight-line attribution?

    Answer: It recognizes more expense in earlier years by treating each tranche as a separate award

    Graded vesting treats each tranche as a separate award with its own service period, front-loading more expense in earlier periods compared to straight-line.

  3. What is the accounting treatment for an equity-classified award that is subsequently modified to become liability-classified?

    Answer: The award is reclassified at fair value on the modification date, with subsequent remeasurement each reporting period

    When an equity award is reclassified to a liability, it is remeasured at fair value on the modification date and then each subsequent reporting period until settlement.

  4. Under SEC reporting requirements, which form requires companies to disclose the aggregate grant-date fair value of equity awards granted to named executive officers (NEOs)?

    Answer: Proxy statement (DEF 14A) Summary Compensation Table

    The SEC's Summary Compensation Table in the proxy statement (DEF 14A) requires disclosure of aggregate grant-date fair value of stock and option awards for each NEO.

  5. A company has outstanding underwater stock options (exercise price above market price). How are these options treated for diluted EPS purposes?

    Answer: Excluded because they are antidilutive

    Underwater (out-of-the-money) options are antidilutive because including them would increase EPS, so they are excluded from the diluted EPS calculation.

  6. Which financial metric is most directly impacted when a company shifts from settling RSUs in cash rather than shares?

    Answer: Classification of compensation expense from equity to liability accounting

    Cash-settled awards are classified as liabilities (not equity), requiring remeasurement at fair value each period, which changes the accounting model significantly.

  7. What is the purpose of Form S-8 filed with the SEC by a public company?

    Answer: To register securities issuable under employee benefit plans, including equity compensation plans

    Form S-8 is used to register shares that a public company intends to issue under its employee benefit plans, such as equity compensation plans.