Series 28 Cheat Sheet

Last revised: September 28, 2026

Compact FINRA Series 28 Cheat sheet for introducing broker-dealer FINOP candidates, covering net capital, customer protection, books and records, reporting, clearing relationships, and exam traps.

Use the tables for a quick pre-exam check. Expand a topic’s notes for explanations, examples, and additional distinctions.

Scope and study context

High-yield Series 28 themes:

Area	What to know cold
Net capital	Computation, aggregate indebtedness, nonallowable assets, haircuts, early warning logic
Customer protection	15c3-3 exemptions, reserve concept, custody red flags
Books and records	Creation, preservation, financial records, order/customer records
Financial reporting	FOCUS, annual audit, supplemental reports, notices
Introducing/clearing relationship	Fully disclosed clearing agreements, responsibility allocation, receivables/payables
FINOP supervision	Accuracy of books, capital withdrawals, expense sharing, subordinated debt
Operational risk	Fails, suspense, reconciliations, customer funds/securities handling

Core FINOP Role for an Introducing Broker-Dealer

FINOP responsibility	Practical Series 28 meaning
Maintain required capital	Net capital must be maintained at all times, not only at month-end.
Supervise financial books	General ledger, trial balance, accruals, capital computation, clearing receivables/payables.
File required reports	FOCUS, annual audited financials, SIPC-related filings, and other required notices.
Monitor regulatory triggers	Net capital deficiency, early warning levels, books-and-records failures, withdrawals, business changes.
Oversee 15c3-3 status	Confirm the firm fits its claimed exemption and handles customer funds/securities consistently.
Control withdrawals and liabilities	Distributions, loans, expense-sharing arrangements, and guarantees can affect capital.
Coordinate with clearing firm	Reconcile commissions, deposits, fails, customer activity, and proprietary balances.

Exam trap: A fully disclosed introducing firm may rely on a carrying firm for custody and account carrying, but it does not outsource its own net capital, books-and-records, reporting, or supervisory obligations.

Net Capital Framework

Main Net Capital Formula

[ \text{Net Capital} = \text{Net Worth}

\text{Allowable Subordinated Liabilities}

\text{Nonallowable Assets}
\text{Haircuts and Other Charges} ]

Term	Exam meaning
Net worth	GAAP assets minus liabilities before regulatory adjustments.
Allowable subordinated liabilities	Subordinated loans or notes that meet regulatory requirements and are properly approved.
Nonallowable assets	Assets not readily convertible to cash or not collectible under regulatory standards.
Haircuts	Deductions for market, credit, concentration, or other risk on proprietary positions.
Net capital	The final regulatory capital amount compared with required minimums.

Notes and examples

Aggregate Indebtedness Method

Introducing broker-dealers are commonly tested under the aggregate indebtedness framework.

\[ \text{Minimum Net Capital} = \max(\text{Applicable Fixed-Dollar Minimum},\ 6\tfrac{2}{3}\% \times \text{Aggregate Indebtedness}) \]\[ \text{AI Ratio} = \frac{\text{Aggregate Indebtedness}}{\text{Net Capital}} \]

Concept	High-yield point
Aggregate indebtedness	Generally the firm’s money liabilities arising from its business.
Ratio test	The firm must keep aggregate indebtedness within the permitted ratio to net capital.
Fixed minimum	Depends on the firm’s business activities. Know that business model drives the base requirement.
Excess net capital	Net capital minus required minimum net capital.
Early warning	A firm can be above minimum but still below an early warning threshold requiring notice/action.

Net Capital Computation Sequence

Step	Action	Common mistake
1	Start with GAAP net worth.	Ignoring accrued expenses or known liabilities.
2	Add only qualifying subordinated liabilities.	Treating ordinary loans as capital.
3	Deduct nonallowable assets.	Leaving prepaid expenses, fixed assets, or unsecured receivables in capital.
4	Apply securities haircuts and charges.	Using market value without haircut deductions.
5	Compare to required minimum.	Testing only fixed minimum and ignoring aggregate indebtedness.
6	Check early warning status.	Assuming “not deficient” means no notice issue.
7	Document and retain computation.	Treating the computation as informal workpaper only.

Net Capital Calculation Sequence

Do not jump straight from balance sheet equity to net capital. The exam often tests the order.

Start with ownership equity / net worth
- Assets minus liabilities under appropriate accounting principles.
- Confirm liabilities are complete, including accruals.
Add qualified subordinated borrowings if allowable
- Only properly documented and approved subordinated liabilities count.
- Ordinary loans payable are generally liabilities, not capital.
Deduct nonallowable assets
- Assets that are not readily convertible to cash or are not collectible in time.
- Common examples: furniture, fixtures, prepaid expenses, unsecured receivables, aged receivables, certain deposits, and unresolved differences.
Apply securities haircuts
- Proprietary securities positions are reduced by required deductions.
- More volatile or less liquid positions usually create larger capital charges.
Apply operational and concentration charges
- Fails, deficits, undue concentration, open commitments, and other specific charges may reduce net capital.
Compare net capital to the required minimum
- Required capital is the greater of the applicable fixed minimum or formula-based requirement.
Determine excess net capital
- Excess net capital is the cushion above the requirement.

[ \text{Excess Net Capital}

\text{Net Capital}

\text{Required Net Capital} ]

Aggregate Indebtedness Cheat Sheet

Aggregate indebtedness generally focuses on the firm’s money liabilities. The Series 28 often tests whether a balance sheet item belongs in aggregate indebtedness, net capital, both, or neither.

Item	Usually included in aggregate indebtedness?	Review point
Accounts payable	Yes	Money liability
Accrued expenses	Yes	Must accrue known expenses
Rent payable	Yes	Ordinary liability
Salaries and bonuses payable	Yes	Accrued compensation counts when owed
Taxes payable	Yes	Liability even if not yet paid
Bank loan payable	Usually yes	Unless properly subordinated and approved
Customer credit balances	Often yes	Liability to customers
Broker-dealer payable	Often yes	Liability unless specifically excluded or offset by rule
Qualified subordinated loan	No, if properly treated as capital	Must meet regulatory conditions
Fully secured liability	May be excluded or limited	Depends on collateral and rule treatment
Equity capital	No	Ownership interest, not indebtedness

AI Ratio Decision Point

If the question gives aggregate indebtedness and net capital, calculate the ratio and compare it with the applicable limit or warning threshold described in the question.

Plain-English version:

Higher aggregate indebtedness means more required capital.
Lower net capital makes the ratio worse.
Accruing an expense can reduce net worth and increase indebtedness at the same time.
Reclassifying a receivable as nonallowable reduces capital even though total assets may not change.

Net Capital Adjustment Reference

Common Nonallowable Assets

Asset	Usual treatment for exam purposes	Why it matters
Furniture, equipment, leasehold improvements	Nonallowable	Not liquid regulatory capital.
Prepaid expenses	Nonallowable	GAAP asset, but not available to meet obligations.
Goodwill and intangibles	Nonallowable	No reliable liquidation value.
Unsecured receivables	Often nonallowable if not promptly collectible	Collection risk reduces capital.
Employee advances	Usually nonallowable unless secured/collectible under rules	Not firm liquidity.
Affiliate receivables	High scrutiny; often nonallowable if unsecured or unsupported	Related-party credit risk.
Aged fails/receivables	May become nonallowable or require charges	Timeliness affects capital.
Deficits in customer or proprietary accounts	Deducted/charged	Represents exposure to loss.

Notes and examples

Common Allowable or Potentially Allowable Assets

Asset	Treatment depends on	Exam focus
Cash in bank	Proper ownership, availability, reconciliation	Restricted or improperly titled cash may be problematic.
Receivable from clearing broker	Collectibility and reconciliation	Fully disclosed firms often rely on clearing receivables.
Marketable proprietary securities	Market value less haircut	Allowable value is not full market value.
Secured receivables	Adequacy of collateral and enforceability	Documentation matters.
Clearing deposit	Terms, collectibility, and restrictions	Do not assume every deposit is fully allowable.

Liability and AI Classification

Item	Capital impact
Accounts payable and accrued expenses	Usually liabilities and part of aggregate indebtedness.
Commissions payable	Liability when earned/owed.
Taxes payable	Liability; ignoring tax accruals overstates capital.
Rent, technology, professional fees	Must be accrued if incurred or contractually owed.
Subordinated debt	Liability for GAAP, but may be added back only if qualifying.
Contingent liabilities	Evaluate whether accrual or disclosure is required.
Guarantees	May create a capital charge or liability exposure.

Allowable vs. Nonallowable Assets

Asset or item	Likely treatment	Exam reason
Cash in bank	Usually allowable	Liquid asset, subject to verification and restrictions
Proprietary securities with ready market	Allowable after haircut	Marketable, but subject to market-risk deduction
Government securities	Allowable after applicable haircut	Lower risk does not mean no haircut
Listed equity securities	Allowable after haircut	Market value must be reduced
Furniture, fixtures, equipment	Nonallowable	Not readily convertible into cash for customer/regulatory protection
Leasehold improvements	Nonallowable	Illiquid operating asset
Prepaid expenses	Nonallowable	Already paid; not available to meet liabilities
Unsecured receivable	Often nonallowable	Collection risk
Aged receivable	Often nonallowable or deducted	Age indicates collectability risk
Clearing deposit	Depends on terms	Restricted deposits may not be fully allowable
Insurance claim receivable	Question-specific	Allowability depends on collectability and documentation
Deferred tax asset	Often nonallowable or limited	Not immediately liquid
Goodwill or intangible assets	Nonallowable	No reliable immediate liquidation value
Deficits in customer or broker accounts	Potential charge	Unsecured exposure or collectability issue

Quick Classification Rule

Ask:

Is the asset cash or readily convertible to cash?
Is it free of restriction?
Is it collectible promptly?
Is there a ready market?
Does a rule require a haircut or deduction?

If the answer is no, restricted, aged, uncertain, or unsupported, expect a deduction or nonallowable treatment.

Haircuts and Securities Positions

Position type	Exam treatment
Proprietary securities owned	Mark to market, then apply required haircut.
Equities	Subject to market risk haircut; do not use full value as net capital.
Debt securities	Haircut depends on type, maturity, rating, and marketability.
Options	Charges can be strategy-specific and more complex.
Concentrated positions	May require additional deductions.
Illiquid or restricted securities	May be nonallowable or heavily charged.
Short positions	Create market exposure and may affect aggregate indebtedness/capital charges.

Exam trap: A profitable proprietary position can still reduce net capital through haircuts. Net capital is a regulatory liquidity calculation, not simply GAAP equity.

Early Warning and Deficiency Logic

Status	Meaning	FINOP action
Adequately capitalized	Net capital exceeds required minimum and early warning levels.	Continue monitoring and documentation.
Early warning	Firm is above minimum but below regulatory comfort threshold.	Provide required notice and limit risky changes.
Net capital deficiency	Net capital is below required minimum.	Immediate escalation, required notice, business restriction/cessation as applicable.
Books-and-records failure	Firm cannot determine capital accurately.	Treat as serious regulatory event; notify/escalate as required.
Withdrawal concern	Distribution or repayment would impair capital.	Block, recalculate, and obtain required approvals/notices.

Notes and examples

Practical Early Warning Checklist

Has net capital fallen close to the required minimum?
Has the AI-to-net-capital ratio deteriorated?
Are liabilities missing from the trial balance?
Are receivables aging into nonallowable status?
Did the firm make, or plan to make, a capital withdrawal?
Are proprietary positions more volatile or concentrated?
Are clearing firm balances reconciled?
Has the firm changed business lines, products, or custody practices?

Early Warning, Deficiency, and Corrective Action

The financial and operations principal must identify capital problems before they become firm-threatening.

Condition	Best exam response
Net capital below required minimum	Immediate regulatory concern; firm cannot continue business as usual
Net capital approaching warning level	Notify as required, restrict withdrawals, raise capital, reduce business
AI ratio too high	Reduce liabilities, increase capital, or both
Books and records not current	Fix immediately; cannot rely on unsupported capital computation
Unrecorded liability discovered	Record it; recompute net capital
Large capital withdrawal proposed	Test pro forma capital before approving
Material FOCUS error found	Correct and amend as required
Clearing deposit becomes restricted	Reassess allowability and net capital impact

Conservative Exam Answer Pattern

When capital is threatened, the best answer usually prioritizes:

Recompute net capital accurately.
Stop or limit business if required.
Notify regulators when required.
Correct books and records.
Add capital or reduce liabilities.
Document the action.

Capital Contributions, Withdrawals, and Subordinated Debt

Topic	Series 28 point
Capital contribution	Increases equity if actually contributed and properly recorded.
Capital withdrawal	Can create deficiency or early warning issue; may require notice or restriction.
Partner/member distribution	Must be tested before payment, not after.
Repayment of subordinated loan	Cannot be made if it causes or worsens capital problems.
Ordinary loan	Does not count as regulatory capital merely because proceeds are cash.
Qualifying subordination	Must meet regulatory form, approval, maturity, and subordination requirements.
Expense paid by affiliate	Requires written support; otherwise the broker-dealer may need to accrue the expense.

Notes and examples

Situation	Correct exam approach
Parent company pays rent/payroll/technology	Determine whether a written agreement clearly assigns responsibility.
No agreement or unclear agreement	Broker-dealer may need to accrue the expense.
Affiliate says it will “cover costs” informally	Not enough; documentation and ability to pay matter.
BD omits expenses to improve capital	Capital is overstated; regulatory issue.

Capital Withdrawals and Subordinated Loans

Capital withdrawals are risky because they reduce the cushion protecting customers and creditors.

Item	Exam focus
Owner withdrawal	Must be tested against net capital after the withdrawal
Dividend or distribution	Same capital effect as withdrawal
Repayment of subordinated loan	Only if permitted under agreement and capital rules
Unapproved loan from owner	May be liability, not capital
Properly subordinated borrowing	May be added to net worth if it meets requirements
Temporary capital injection	Must be genuine and documented
Capital used to cover operating losses	Capital falls as losses accrue

Subordination Trap

A loan from an owner is not automatically capital. It must meet the requirements for qualified subordinated debt. Otherwise, it is a payable that may worsen aggregate indebtedness.

Customer Protection Rule Concepts

15c3-3 High-Yield Distinction

Firm type	Customer protection issue
Carrying broker-dealer	Carries customer accounts; subject to possession/control and reserve requirements unless otherwise exempt.
Introducing broker-dealer	Typically does not carry accounts; may rely on an exemption if it promptly transmits funds/securities and follows clearing arrangement.
Exempt introducing firm	Exempt from certain 15c3-3 mechanics, not from net capital, books, reporting, or supervision.
Non-exempt or custody-like activity	May trigger reserve/possession-control concerns and higher risk.

Notes and examples

Common 15c3-3 Exemption Patterns

Pattern	Key condition
Prompt transmittal model	Firm does not hold customer funds/securities and promptly forwards them.
Fully disclosed introducing model	Customer accounts are carried by another broker-dealer under a clearing agreement.
Check handling	Checks should be handled consistently with exemption; payee and timing matter.
Securities handling	Customer securities should not be held or controlled outside the permitted process.

Exam trap: “We usually forward checks quickly” is not the same as a controlled process that supports the firm’s claimed exemption.

Customer Reserve Formula Concept

For firms subject to the reserve requirement:

\[ \text{Required Deposit} = \max(\text{Customer Credits} - \text{Customer Debits},\ 0) \]

Component	Meaning
Customer credits	Amounts the firm owes customers or customer-related credits.
Customer debits	Amounts customers owe the firm or permitted offsets.
Special reserve bank account	Account maintained for the exclusive benefit of customers.
Deficit result	If debits exceed credits, no deposit is required from the formula, but other rules still apply.

Introducing firms often test this concept through exemption analysis, not full carrying-firm computation.

Customer Protection Rule Decision Path

    flowchart TD
	    A[Does the firm carry customer accounts?] -->|Yes| B[Expect carrying-firm customer protection obligations]
	    A -->|No| C[Does the firm receive or hold customer funds or securities?]
	    C -->|No| D[Noncarrying / introducing analysis]
	    C -->|Receives only for prompt transmission| E[Check payable to correct party and promptly forward]
	    C -->|Holds or controls| F[Potential custody issue and higher regulatory concern]
	    D --> G[Verify fully disclosed clearing arrangement]
	    E --> G
	    G --> H[Maintain books, records, notices, and exemption support]
	    F --> I[May lose expected treatment; review net capital and customer protection consequences]

Customer Funds and Securities Traps

Situation	Exam concern
Customer check made payable to the introducing firm	May indicate receipt of customer funds; treatment depends on prompt handling and firm permissions
Check made payable to clearing firm or issuer and promptly forwarded	More consistent with introducing-firm role
Customer securities left at the introducing firm	Possession/control issue; may violate procedures
Employee delays forwarding customer funds	Operational and supervisory failure
Firm uses customer funds for operating expenses	Serious violation; customer funds cannot finance the firm
Fully disclosed agreement exists but firm’s conduct differs	Actual conduct can override labels

SIPC and Customer Protection Concepts

SIPC concepts may appear in financial operations questions.

Concept	Know this
SIPC	Protects customers if a member broker-dealer fails financially, subject to limits and conditions
Not insurance against market loss	SIPC does not make customers whole for bad investments
Assessments and reports	Member firms may have filing and assessment obligations
Customer property	Distinct from firm property
Exam trap	Saying SIPC protects against investment performance, fraud losses generally, or unsuitable recommendations

Introducing vs Carrying Firm Responsibilities

Function	Introducing firm	Carrying firm
Customer relationship	Often owns front-end relationship and suitability/supervision obligations.	Provides account carrying infrastructure.
Account custody	Generally no custody if fully disclosed/exempt.	Holds customer funds/securities.
Confirms/statements	May be allocated by agreement/rule.	Often sends as carrying firm.
Books for own business	Must maintain its own books.	Maintains its own books and customer records it carries.
Net capital	Computes its own requirement.	Computes its own requirement.
Clearing receivable/payable	Reconciles with clearing firm.	Reconciles reciprocal balances.
Customer complaints	Introducing firm may have supervisory/reporting obligations.	Carrying firm may have records/operational role.

Notes and examples

Fully Disclosed Clearing Agreement Checklist

Allocation of responsibilities is written.
Customer accounts are carried in the name of the carrying firm.
Confirmations and statements identify roles as required.
Customer funds/securities are transmitted to the proper party.
Introducing firm reconciles clearing balances.
Commission revenue and clearing charges are accrued correctly.
The agreement does not eliminate the introducing firm’s regulatory duties.

Introducing Broker-Dealer vs. Carrying Broker-Dealer

This distinction is central to the Series 28.

Function	Introducing broker-dealer	Carrying / clearing broker-dealer
Customer accounts	Introduces on a fully disclosed basis	Carries customer accounts
Customer funds/securities	Generally should not hold; promptly transmits if received	May receive, hold, and safeguard
Customer statements	Often generated by carrying firm	Usually responsible for custody-related statements
Customer Protection Rule reserve	Often relies on exemption or noncarrying status	Typically must calculate reserve and maintain possession/control
Net capital burden	Lower than a carrying firm, but still critical	Higher and more complex
Operations focus	Books, records, commissions, clearing relationship, capital	Custody, margin, settlement, reserve formula, possession/control
Exam trap	Assuming “introducing” means no financial responsibility	Assuming every introducing firm has carrying-firm obligations

Books and Records Reference

SEC Books-and-Records Structure

Rule concept	Practical meaning
Make records	Required records must be created accurately and timely.
Preserve records	Required records must be retained for prescribed periods.
Easy accessibility	Certain records must be readily accessible for examination.
Electronic storage	Must meet regulatory requirements for preservation, indexing, and retrieval.
Supervisory accountability	FINOP must ensure records support financial reporting and capital computations.

Notes and examples

Core Financial Records

Record	Why it matters
General ledger	Source for financial statements and net capital.
Trial balance	Detects posting errors and supports FOCUS.
Cash receipts/disbursements blotter	Tracks money movement.
Securities record/stock record, if applicable	Tracks securities positions and possession/control issues.
Customer ledgers, if applicable	Supports customer balances and 15c3-3 status.
Proprietary trading records	Supports haircuts and gains/losses.
Payables and accrual schedules	Prevents understated aggregate indebtedness.
Receivable aging	Identifies nonallowable assets.
Net capital computation	Must be retained and supportable.
Bank reconciliations	Detects errors, restrictions, and missing cash.

Operational Records

Record	Exam relevance
Order tickets/memoranda	Required trading records; time and terms matter.
Confirmations	Evidence of transaction details.
Customer account records	Support identity, authority, and account terms.
Written agreements	Clearing, expense sharing, subordinations, leases, service agreements.
Complaint records	Can trigger reporting and supervisory review.
Associated person records	Registration, employment, compensation, and disciplinary records.
Communications	Must be retained if business-related.

Reporting and Filing Framework

Report/notice	High-yield purpose
FOCUS report	Periodic financial and operational report filed with regulators.
Annual audited financial statements	Independent audit of broker-dealer financial statements and related reports.
Exemption or compliance report	Relates to customer protection rule status.
SIPC filings	Assessment/reporting obligations for SIPC members.
Early warning notice	Alerts regulators to deteriorating financial condition.
Net capital deficiency notice	Required when firm is below required capital.
Material event notices	Certain operational, financial, or business events require notification.
Supplemental schedules	Support net capital, reserve formula, possession/control, and other financial responsibility items.

Notes and examples

Filing Exam Traps

Trap	Correct approach
Waiting until month-end to fix capital	Capital must be maintained continuously.
Filing FOCUS from unreconciled books	Report must agree to accurate books and records.
Ignoring post-close adjustments	Accruals and corrections may affect the report period.
Treating audit as regulator’s responsibility	Firm management remains responsible for financial statements.
Missing exemption report logic	Exempt firms must still support why they are exempt.
Assuming no customer accounts means no SIPC issue	SIPC status depends on membership and activities, not just carrying status.

SIPC Concepts

Concept	Exam point
SIPC purpose	Protects customers when a member broker-dealer fails and customer property is missing.
Not insurance against market loss	Decline in investment value is not a SIPC claim.
Cash vs securities	Coverage distinguishes cash awaiting investment from securities positions.
Customer property	Focus is return/replacement of customer assets held by failed firm.
Introducing firm relevance	Even non-carrying firms may have SIPC reporting/assessment responsibilities depending on status.
Disclosures	Customers must not be misled about what SIPC covers.

FINRA and SEC Rule Areas to Recognize

Rule area	What Series 28 candidates should recognize
SEA Rule 15c3-1	Net capital rule.
SEA Rule 15c3-3	Customer protection rule.
SEA Rule 17a-3	Records to be made.
SEA Rule 17a-4	Records to be preserved.
SEA Rule 17a-5	Financial reporting and annual audit framework.
SEA Rule 17a-11	Notices for net capital and related financial issues.
FINRA capital rules	FINRA financial responsibility, notification, and restriction framework.
FINRA books-and-records rules	FINRA recordkeeping overlays and supervisory expectations.
FINRA clearing agreement rules	Carrying/clearing agreement requirements and allocation of functions.
FINRA fidelity bond rule	Required protection against certain employee/officer dishonesty risks.
FINRA business continuity rule	Written continuity planning for operational disruptions.

Accounting Treatment Cheat Sheet

Item	Debit/Credit intuition	Exam concern
Commission revenue earned	Revenue/receivable	Receivable must be collectible to be allowable.
Clearing charges	Expense/payable	Must be accrued; affects AI.
Payroll earned but unpaid	Expense/accrued liability	Understating liabilities overstates capital.
Rent paid in advance	Prepaid asset	GAAP asset but usually nonallowable.
Fixed asset purchase	Asset/cash reduction	Fixed asset generally nonallowable.
Capital contribution	Cash/equity	Improves capital if unrestricted and documented.
Owner distribution	Equity/cash reduction	Test capital before payment.
Subordinated loan proceeds	Cash/sub debt	Add-back only if qualifying.
Proprietary security gain	Asset/revenue	Still subject to haircut.
Bad debt reserve	Expense/contra asset	Receivable collectibility affects allowable assets.

Receivables and Payables with Clearing Firms

Balance	FINOP review
Commissions receivable	Agree to clearing statement; assess collectibility.
Clearing charges payable	Accrue in correct period.
Deposit with clearing firm	Determine whether refundable, restricted, or impaired.
Fail-related balances	Monitor aging and capital charges.
Error account balance	Review losses, corrections, and responsible party.
Customer-related items	Ensure activity is consistent with introducing/exempt status.
Proprietary account at clearing firm	Mark to market and apply haircuts.

Reconciliation Checklist

Compare general ledger to clearing broker statement.
Investigate aged or unexplained differences.
Reclassify receivables/payables correctly.
Determine whether receivables are allowable.
Accrue clearing charges, ticket charges, and interest.
Update net capital computation.
Retain reconciliation support.

Notes and examples

Final Cheat Sheet Checklist

Before you move into a mock exam, make sure you can answer these without notes:

What is the difference between net worth and net capital?
Which assets are usually nonallowable?
How do haircuts affect proprietary positions?
What liabilities are usually included in aggregate indebtedness?
How do you calculate excess net capital?
What happens when a firm discovers an unrecorded liability?
Why can a prepaid expense reduce regulatory capital?
What makes a receivable nonallowable?
How does an introducing firm handle customer checks and securities?
What is the purpose of a fully disclosed clearing agreement?
Why are fails and DKs financial responsibility issues?
What records support a FOCUS report?
What should a FinOp do when capital is near a warning level?
Why is an owner loan not automatically capital?
What is the difference between SIPC protection and market-loss protection?

Customer Funds and Securities Handling

Scenario	Likely exam issue
Customer check payable to carrying firm	Usually consistent with fully disclosed model if promptly forwarded.
Customer check payable to introducing firm	May create custody, net capital, and exemption concerns.
Introducing firm holds customer stock certificates overnight	Potential violation of exemption/control process.
Rep mails securities to home office without procedure	Operational and supervisory risk.
Customer wires funds to wrong account	Must correct promptly; assess whether firm held customer funds.
Firm uses customer funds for expenses	Severe violation; customer protection and capital issue.

Fails, DKs, and Operational Breaks

Term	Meaning	FINOP relevance
Fail to deliver	Firm did not deliver securities on settlement.	May create capital charge or operational risk.
Fail to receive	Firm did not receive securities on settlement.	Aging and counterparty exposure matter.
DK	“Don’t know”; counterparty does not recognize trade.	Must be resolved; affects books and risk.
Suspense account	Temporary holding for unresolved items.	Must not hide losses or aged receivables.
Break	Difference between internal records and external statement.	Must be investigated and documented.

Exam trap: A suspense account is not a solution. It is a temporary classification that requires resolution and may affect capital.

Fidelity Bond and Insurance Concepts

Topic	Exam point
Fidelity bond	Protects firm against certain dishonest or fraudulent acts by personnel.
Coverage amount	Based on regulatory requirements and firm profile.
Deductible	Must be considered for capital and compliance purposes.
Cancellation/change	May require notice and supervisory action.
Not a substitute for capital	Insurance does not eliminate net capital requirements.

Business Continuity and Operational Controls

Control	Why tested
Written business continuity plan	Required operational resilience framework.
Emergency contact information	Regulators need current contacts.
Data backup and recovery	Books and records must remain accessible.
Alternate communications	Supports customer and regulator contact.
Critical vendor review	Clearing firm, payroll, cloud systems, banks, and compliance vendors.
Annual review/update	Plan must reflect current business.

Decision Tables for Common Exam Scenarios

Is the Asset Allowable?

Question	If yes	If no
Is it cash or readily convertible to cash?	Continue analysis.	Likely nonallowable.
Is it legally owned by the broker-dealer?	Continue analysis.	Exclude or reclassify.
Is it unrestricted and available?	Continue analysis.	Deduct/restrict.
Is it collectible from a creditworthy party?	May be allowable.	Deduct or reserve.
Is it aged beyond permitted period?	Deduct/charge likely.	May remain allowable.
Is it subject to market risk?	Apply haircut.	No haircut if no market exposure.

Notes and examples

Does a Liability Count in Aggregate Indebtedness?

Question	Treatment
Is it a money liability of the broker-dealer?	Usually include in AI.
Has the expense been incurred but not invoiced?	Accrue and include if owed.
Is it validly subordinated under regulatory requirements?	May be excluded from AI and added back in capital.
Is another party legally obligated to pay it?	Review written agreement and facts.
Is it contingent but probable/estimable?	May require accrual.

Does Customer Handling Threaten Exempt Status?

Question	Risk indicator
Does the firm receive checks payable to itself?	Higher custody/exemption risk.
Does the firm hold securities certificates?	Higher custody/exemption risk.
Are funds/securities forwarded promptly?	Supports exemption if documented.
Are accounts carried fully disclosed by a clearing firm?	Supports introducing model.
Are customer assets ever used by the introducing firm?	Serious violation.

High-Yield Terminology

Term	Compact definition
FINOP	Principal responsible for financial and operational compliance.
Introducing broker-dealer	Broker-dealer that introduces accounts, often to a clearing/carrying firm.
Carrying broker-dealer	Broker-dealer that carries customer accounts and holds customer funds/securities.
Fully disclosed basis	Customer is disclosed to the carrying firm, which carries the account.
Net capital	Regulatory liquidity capital after deductions and charges.
Tentative net capital	Capital before final haircut/market-risk deductions.
Aggregate indebtedness	Money liabilities used in the AI capital standard.
Nonallowable asset	Asset deducted from net worth for net capital purposes.
Haircut	Regulatory deduction for market or other risk.
Excess net capital	Net capital above required minimum.
Early warning	Regulatory notice zone before outright deficiency.
Subordinated debt	Debt that may qualify as regulatory capital if properly approved/subordinated.
FOCUS	Financial and Operational Combined Uniform Single report.
Reserve formula	15c3-3 computation comparing customer credits and debits.
Special reserve bank account	Bank account for exclusive benefit of customers or PABs, as applicable.
Possession or control	Requirement to safeguard fully paid and excess margin securities.
PAB account	Proprietary account of another broker-dealer.
Fail to deliver	Securities not delivered on settlement.
Fail to receive	Securities not received on settlement.
DK	Counterparty does not recognize trade details.
Blotter	Chronological record of transactions or cash movements.

Common Series 28 Traps

Trap	Correct answer logic
“The clearing firm handles it, so the introducing firm has no responsibility.”	Introducing firm still has its own FINOP, books, capital, and supervision duties.
“GAAP equity equals net capital.”	Regulatory deductions and haircuts must be applied.
“Prepaid expenses are assets, so they help capital.”	They are generally nonallowable.
“Subordinated debt always counts as capital.”	Only qualifying, approved subordination counts.
“A firm only needs capital on filing dates.”	Net capital is continuous.
“If above minimum, no notice is ever required.”	Early warning thresholds can require notice.
“Exempt from 15c3-3 means exempt from financial responsibility rules.”	False; exemption is limited.
“Unbilled expenses can be ignored.”	Incurred expenses must be accrued.
“Receivables are allowable because management expects payment.”	Collectibility, aging, and security determine treatment.
“Customer checks can sit in the office until convenient.”	Prompt forwarding and payee controls are critical.
“SIPC covers customer market losses.”	SIPC addresses missing customer property after broker-dealer failure, not investment loss.
“A suspense account avoids capital impact.”	Unresolved balances may require charges or write-offs.

Last-Week Study Checklist

Rework net capital computations from trial balance to final excess net capital.
Practice classifying assets as allowable vs nonallowable.
Practice identifying aggregate indebtedness items.
Review 15c3-3 exemption fact patterns for introducing firms.
Memorize the difference between introducing, carrying, clearing, and fully disclosed roles.
Drill FOCUS/audit/notice purpose, not just names.
Review expense-sharing and subordinated loan scenarios.
Practice receivable aging, clearing reconciliation, and suspense-account questions.
Review SIPC coverage purpose and common misconceptions.
For each practice question, ask: Does this affect capital, custody, books, reporting, or notice?

Cheat Sheet Overview

This Cheat Sheet is for candidates preparing for FINRA’s Series 28 — Introducing Broker-Dealer Financial and Operations Principal Qualification Examination. The goal is fast, exam-focused review before moving into topic drills, mock exams, and detailed explanations.

The Series 28 candidate should think like a financial and operations principal at an introducing broker-dealer: protect the firm’s minimum capital, maintain accurate books and records, file required reports, understand customer protection boundaries, and recognize when a transaction or balance sheet item creates a regulatory capital issue.

Use this page as an independent companion practice aid. It is not affiliated with FINRA or any regulator. Always use current FINRA and SEC materials as the controlling source for rule language and current requirements.

High-Yield Series 28 Mindset

If the question says…	Think first about…	Common trap
“Introducing broker-dealer”	Does the firm carry accounts, hold funds, or hold securities?	Treating the firm like a clearing broker
“Net capital”	Start with net worth, remove nonallowable assets, apply haircuts and charges	Counting illiquid assets as capital
“Aggregate indebtedness”	Money liabilities compared with net capital	Forgetting accrued expenses, payables, or customer credits
“Customer funds or securities”	Prompt transmission, fully disclosed clearing arrangement, possession/control	Holding customer checks or securities too long
“FOCUS report”	Financial reporting, net capital computation, supporting books	Confusing annual audit with periodic FOCUS filing
“Clearing deposit”	Is it allowable, restricted, or subject to a deduction?	Assuming all deposits are fully liquid
“Fail, aged receivable, or unresolved difference”	Potential capital deduction or nonallowable asset	Ignoring age and collectability
“Proprietary position”	Haircut, market risk, concentration, open commitment	Using market value without haircut
“Early warning”	Notice requirement before or at financial deterioration	Waiting until actual deficiency
“Exam asks for best action”	Maintain capital, file notice, stop business if deficient, document support	Choosing a sales or revenue answer over regulatory protection

Core Financial Responsibility Framework

The Series 28 heavily tests whether you can classify items correctly and follow the calculation sequence.

Net Capital Core Formula

[ \text{Net Capital}

\text{Net Worth} + \text{Qualified Subordinated Liabilities}

\text{Nonallowable Assets}

\text{Haircuts and Other Charges} ]

Required Net Capital Under the Aggregate Indebtedness Standard

[ \text{Required Net Capital}

\max(\text{Fixed Dollar Minimum},\ \text{Percentage Requirement Based on Aggregate Indebtedness}) ]

For exam purposes, remember the concept: the firm must maintain the greater of the applicable fixed-dollar minimum and the required amount based on indebtedness. If the firm is near a limit, the conservative answer is usually to reduce liabilities, increase allowable capital, restrict withdrawals, or notify as required.

FOCUS Reports and Financial Reporting

FOCUS reporting is a high-yield Series 28 topic because it connects books, records, capital, and regulatory supervision.

Report / filing area	What to know for exam review	Common mistake
FOCUS report	Periodic financial and operational report filed through required regulatory channels	Treating it as only an accounting report
Balance sheet	Shows assets, liabilities, and equity at a date	Forgetting nonallowable asset impact
Income statement	Shows revenue and expense over a period	Ignoring accruals
Net capital computation	Supports capital compliance	Not tying it to general ledger
Aggregate indebtedness schedule	Supports AI ratio	Omitting accrued liabilities
Annual audited financial statements	Independent audit support for financial condition	Confusing audit with daily capital monitoring
Supplemental schedules	Provide regulatory detail	Assuming summary statements are enough
Amendments	Correct material errors	Ignoring inaccurate prior filing

Notes and examples

Reporting Review Rules of Thumb

The books must support the report.
The report must support the net capital computation.
The net capital computation must be current enough to detect deterioration.
Material errors require correction, not silence.
A firm cannot solve a capital deficiency by delaying the filing.

Books and Records: What to Recognize Quickly

FINRA and SEC recordkeeping expectations are a major part of the financial operations function.

Record type	Why it matters	Exam angle
General ledger	Master accounting record	Must reconcile to trial balance and financial reports
Cash receipts and disbursements blotter	Tracks money movement	Detects misuse, errors, and unrecorded liabilities
Securities blotter	Tracks securities transactions	Supports trade and position records
Customer account records	Shows customer identity and account details	Introducing firms still maintain required records
Proprietary position records	Supports haircut calculations	Missing positions understate capital charges
Trial balance	Checks ledger equality	Unbalanced trial balance signals record problem
Bank reconciliations	Verifies cash	Old reconciling items may become charges
Clearing broker statements	Supports commissions, deposits, fails, and receivables	Must reconcile to internal books
Expense accrual support	Ensures liabilities are complete	Underaccruing inflates capital
Written supervisory procedures	Shows how compliance is performed	Procedures must match actual operations

Accrual Accounting Traps

Series 28 questions often hide capital issues inside accounting treatment.

Fact pattern	Correct thinking
Expense incurred but not paid	Accrue the liability; net worth decreases
Commission earned but not received	Record receivable only if collectible and supported
Receivable is old or disputed	Deduct or treat as nonallowable if required
Prepaid rent or insurance	Asset for accounting, but usually nonallowable for net capital
Bonus declared but unpaid	Liability if earned/obligated
Legal settlement probable and estimable	Accrual may be required
Bank account unreconciled	Cash may be overstated; investigate before relying on it
Clearing broker charges not booked	Capital may be overstated

Haircuts and Market Risk

A haircut is a regulatory deduction from the value of proprietary positions. It recognizes that securities may decline in value before they can be liquidated.

Position type	Exam concept
U.S. government securities	Usually lower haircut than equities, but still subject to deduction
Municipal securities	Haircut depends on features such as maturity and marketability
Corporate debt	Haircut depends on quality, maturity, and market risk
Listed equity securities	Standard equity haircut concepts frequently tested
Options	Strategy and position relationships matter
Illiquid or nonmarketable securities	May be heavily deducted or nonallowable
Concentrated positions	Additional charge may apply
Open contractual commitments	Can create capital charges before settlement

Notes and examples

Haircut Mistakes

Using market value as net capital without deduction.
Netting long and short positions when the rules do not allow it.
Ignoring concentration.
Treating restricted stock as freely marketable.
Forgetting proprietary accounts held at the clearing firm.
Ignoring unsettled trades that create position exposure.

Fails, Receivables, and Operational Charges

Fails and aged balances are common exam topics because they connect operations to capital.

Item	Meaning	Capital concern
Fail to deliver	Firm sold securities but did not deliver	May require charge if unresolved
Fail to receive	Firm bought securities but has not received them	Exposure to counterparty or market movement
DK / don’t know notice	Counterparty does not recognize trade	Must resolve promptly
Aged receivable	Amount due but not collected timely	May become nonallowable
Unsecured debit	Amount owed without adequate collateral	Capital deduction risk
Stock record difference	Internal records do not match actual positions	Potential capital and books/records issue
Suspense account	Temporary unresolved item	Must be investigated; cannot hide losses

Exam Rule of Thumb

If an item is old, unresolved, unsecured, disputed, or unsupported, expect the exam to push you toward a deduction, charge, notice, or corrective action.

Securities Settlement and Operations

Even an introducing broker-dealer must understand trade flow, settlement exposure, and clearing relationships.

Stage	What happens	Series 28 focus
Order entry	Customer order accepted	Correct account, capacity, and suitability/supervision context
Execution	Trade occurs	Trade details must be captured accurately
Comparison / affirmation	Parties agree on trade terms	DKs and breaks must be resolved
Clearance	Clearing broker processes obligations	Introducing firm reconciles clearing records
Settlement	Money and securities exchanged	Fails create exposure and possible charges
Confirmation	Customer receives transaction details	Accuracy and required disclosures
Statement cycle	Customer positions and balances reported	Carrying broker often responsible, but introducing firm must supervise its role

Current Settlement Awareness

For many U.S. securities, regular-way settlement is commonly tested as a short settlement cycle. Always confirm the current settlement standard in current exam materials, because settlement cycles can change.

Margin, Credit, and Customer Balances

An introducing firm may not carry margin balances itself, but questions can still test margin concepts because the firm introduces accounts and supervises customer activity.

Concept	Review point
Reg T	Federal credit rule for initial margin in securities transactions
Maintenance margin	Ongoing equity requirement after purchase
Margin agreement	Customer authorization and disclosures matter
Day trading	Higher-risk activity with special requirements
Debit balance	Customer owes money; carrying firm usually carries the balance
Credit balance	Firm or carrying broker owes customer
Introducing firm role	Understand, disclose, supervise, and coordinate with clearing firm
Trap	Assuming the introducing firm can ignore margin because it does not carry accounts

Underwriting and Contingent Offerings

Series 28 candidates should recognize when underwriting activity affects capital or customer funds.

Offering type	Financial operations issue
Firm commitment underwriting	Underwriter takes inventory risk; capital charge possible
Best efforts	No firm inventory commitment, but funds-handling rules matter
All-or-none	Investor funds must be handled according to contingency terms
Minimum-maximum	Funds handling depends on minimum being met
Escrow arrangement	Used to protect investor funds in contingent offerings
Open contractual commitment	May require capital charge
Unsold allotment	May create proprietary exposure

Offering Trap

A “best efforts” label does not eliminate financial responsibility. Customer funds in a contingent offering must be handled exactly as required by the offering terms and applicable rules.

Supervisory and Principal Responsibilities

A Series 28 principal is expected to understand both calculation and control.

Responsibility	What it means
Maintain accurate books	Financial records must be current and supported
Monitor net capital	Not only at month-end or filing time
Approve financial reports	Reports must reconcile to books
Supervise operations staff	Delegation does not remove responsibility
Coordinate with clearing firm	Reconcile statements, deposits, commissions, fails
Escalate deficiencies	Notify and correct when required
Maintain written procedures	Procedures should match actual workflow
Preserve records	Records must be retained and accessible
Support audits	Provide schedules, reconciliations, and evidence

Delegation Trap

A FinOp may delegate tasks, but not accountability. If a clerk prepares a capital computation incorrectly, the principal is still expected to supervise, review, and correct it.

AML, Privacy, and Operational Controls

The Series 28 is financial-operations focused, but operational control questions may include related compliance themes.

Area	Fast review
AML program	Written program, customer identification, monitoring, suspicious activity escalation
Customer identification	Verify and document according to firm procedures
OFAC / sanctions screening	Escalate potential matches
Suspicious activity	Escalate; do not ignore unusual money movement
Privacy	Protect nonpublic customer information
Cybersecurity	Safeguard systems and records
Business continuity	Ensure critical operations can continue
Vendor oversight	Clearing and technology vendors still require supervision

Trial Balance and Reconciliation Review

A common exam pattern gives a list of balances and asks what adjustment is needed.

Problem	Likely effect
Bank statement lower than ledger cash	Cash may be overstated; net capital may be overstated
Outstanding checks not recorded	Liabilities or cash reductions may be missing
Deposit in transit unsupported	Potential cash overstatement
Clearing receivable disputed	May be nonallowable
Commission payable omitted	Liabilities understated; net worth overstated
Proprietary trade not recorded	Haircuts may be missing
Fail not aged properly	Capital charge may be missed
Suspense account unresolved	Must investigate; may require deduction

Reconciliation Decision Rule

If a reconciliation difference cannot be explained and supported, do not give the firm capital credit for the favorable side of the difference.

Common Series 28 Candidate Mistakes

Confusing net worth with net capital
Net worth is only the starting point. Net capital requires regulatory deductions.
Ignoring nonallowable assets
Accounting assets are not always regulatory capital assets.
Forgetting accruals
Unpaid expenses can reduce net worth and increase aggregate indebtedness.
Treating owner loans as capital automatically
Only properly qualified subordinated borrowings receive capital treatment.
Assuming introducing firms have no customer protection obligations
Introducing firms still need proper handling, prompt transmission, records, and exemption support.
Missing the clearing broker relationship
Clearing deposits, commissions receivable, fails, and trade breaks often come from the clearing statement.
Overlooking haircuts on proprietary positions
Marketable securities are not counted at full market value for net capital.
Failing to age receivables and fails
Old items become capital problems.
Choosing a business-growth answer over a capital-protection answer
The exam usually rewards financial responsibility, not revenue maximization.
Relying on labels instead of facts
“Introduced,” “escrowed,” “subordinated,” or “fully disclosed” must be supported by actual documentation and conduct.

Fast Calculation Practice Table

Question asks for…	Use…	Watch for…
Net capital	Net worth plus qualified subordinated debt minus deductions	Nonallowable assets and haircuts
Required net capital	Greater of fixed minimum or formula-based requirement	Aggregate indebtedness
Excess net capital	Net capital minus required net capital	Early warning cushion
AI ratio	Aggregate indebtedness divided by net capital	Liabilities omitted from AI
Effect of expense accrual	Net worth down; AI up	Double impact
Effect of prepaid expense	Asset may be nonallowable	Accounting asset, regulatory deduction
Effect of proprietary stock position	Haircut reduces capital	Concentration or restricted stock
Effect of receivable aging	Deduction or nonallowable treatment	Collectability
Effect of owner withdrawal	Capital decreases	Pro forma deficiency

Mini Drill Examples

Example 1: Nonallowable Asset

A firm has net worth of 300,000, including 40,000 of furniture and 20,000 of prepaid insurance. Before haircuts, what is the impact?

Furniture is nonallowable.
Prepaid insurance is generally nonallowable.
Tentative capital is reduced by 60,000 before other deductions.

Example 2: Accrued Expense

A firm forgot to accrue 25,000 in legal expenses.

Liabilities increase by 25,000.
Net worth decreases by 25,000.
Aggregate indebtedness may increase by 25,000.
Net capital and AI ratio both worsen.

Example 3: Proprietary Security Position

A firm owns marketable securities.

The position may be an allowable asset.
But it must be reduced by the applicable haircut.
If concentrated or illiquid, additional deductions may apply.

Example 4: Clearing Receivable

A clearing broker owes the introducing firm a commission receivable.

If current, supported, and collectible, it may receive favorable treatment.
If aged, disputed, or unsupported, expect nonallowable treatment or a charge.

Topic Drill Priorities

Use original practice questions to drill the highest-yield Series 28 areas in this order:

Net capital computation
- Nonallowable assets
- Haircuts
- Subordinated loans
- Capital charges
Aggregate indebtedness
- Included vs excluded liabilities
- AI ratio
- Required capital
- Excess capital
Introducing broker-dealer operations
- Fully disclosed clearing
- Customer funds and securities
- Clearing deposits
- Commission receivables
Books and records
- Ledgers
- Blotters
- Trial balance
- Reconciliations
- Record preservation
Regulatory reporting
- FOCUS concepts
- Annual audit support
- Amendments and notices
- SIPC-related concepts
Operational risk
- Fails
- DKs
- Aged receivables
- Suspense items
- Trade breaks
Supervision and controls
- Written procedures
- Delegation
- Escalation
- Capital withdrawal review

Put the review into practice

Finance Prep

Start Series 28 \u2014 Introducing Broker-Dealer Financial and Operations Principal Qualification Examination on Web

Use the web app to preview question style, then practise the topics you need to revisit.

Original Finance Prep practice, independent from FINRA: not official FINRA questions, copied live-exam content, or exam dumps.

Current alignment Aligned to the relevant syllabus, exam elements, competency areas, and topic weights where they are available.

Practice modes Use topic drills, timed mocks, scenario questions, and focused review before deeper mixed practice.

Teaching explanations Explanations show the client, product, compliance, or calculation rule that makes the best answer defensible.

Stable bank Questions are prebuilt and reviewed before publication, so practice is stable and inspectable, not improvised during a quiz.

Study Plan

Series 28 Cheat Sheet

Core FINOP Role for an Introducing Broker-Dealer

Net Capital Framework

Main Net Capital Formula

Aggregate Indebtedness Method

Net Capital Computation Sequence

Net Capital Calculation Sequence

[ \text{Excess Net Capital}

\text{Net Capital}

Aggregate Indebtedness Cheat Sheet

AI Ratio Decision Point

Net Capital Adjustment Reference

Common Nonallowable Assets

Common Allowable or Potentially Allowable Assets

Liability and AI Classification

Allowable vs. Nonallowable Assets

Quick Classification Rule

Haircuts and Securities Positions

Early Warning and Deficiency Logic

Practical Early Warning Checklist

Early Warning, Deficiency, and Corrective Action

Conservative Exam Answer Pattern

Capital Contributions, Withdrawals, and Subordinated Debt

Expense-Sharing Agreement Trap

Capital Withdrawals and Subordinated Loans

Subordination Trap

Customer Protection Rule Concepts

15c3-3 High-Yield Distinction

Common 15c3-3 Exemption Patterns

Customer Reserve Formula Concept

Customer Protection Rule Decision Path

Customer Funds and Securities Traps

SIPC and Customer Protection Concepts

Introducing vs Carrying Firm Responsibilities

Fully Disclosed Clearing Agreement Checklist

Introducing Broker-Dealer vs. Carrying Broker-Dealer

Books and Records Reference

SEC Books-and-Records Structure

Core Financial Records

Operational Records

Reporting and Filing Framework

Filing Exam Traps

SIPC Concepts

FINRA and SEC Rule Areas to Recognize

Accounting Treatment Cheat Sheet

Receivables and Payables with Clearing Firms

Reconciliation Checklist

Final Cheat Sheet Checklist

Customer Funds and Securities Handling

Fails, DKs, and Operational Breaks

Fidelity Bond and Insurance Concepts

Business Continuity and Operational Controls

Decision Tables for Common Exam Scenarios

Is the Asset Allowable?

Does a Liability Count in Aggregate Indebtedness?

Does Customer Handling Threaten Exempt Status?

High-Yield Terminology

Common Series 28 Traps

Last-Week Study Checklist

Cheat Sheet Overview

High-Yield Series 28 Mindset

Core Financial Responsibility Framework

Net Capital Core Formula

[ \text{Net Capital}

\text{Net Worth} + \text{Qualified Subordinated Liabilities}

\text{Nonallowable Assets}

Required Net Capital Under the Aggregate Indebtedness Standard

[ \text{Required Net Capital}

FOCUS Reports and Financial Reporting

Reporting Review Rules of Thumb

Books and Records: What to Recognize Quickly

Accrual Accounting Traps

Haircuts and Market Risk

Haircut Mistakes

Fails, Receivables, and Operational Charges

Exam Rule of Thumb

Securities Settlement and Operations

Current Settlement Awareness

Margin, Credit, and Customer Balances

Underwriting and Contingent Offerings