,Test Bank For Financial Reporting, Financial Statement Analysis and Valuation 10th
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
1. 01: The tools for studying industry economics does not include:
The tools for studying industry economics does not include:
a. Value chain analysis
b. Classification using Porter’s five forces
*c. Classification of cash flows
d. Economic attributes framework
2. 02: Which of the following is a question an analyst would ask wh
Which of the following is a question an analyst would ask when assessing the quality of a firm’s
financial statements?
a. Are the company’s products designed to meet a specific market segment?
b. Has the firm integrated forward into retailing to final consumers?
c. Is the firm diversified across several geographical markets?
*d. Do earnings include nonrecurring gains or losses?
3. 03: Which of the following economic characteristics is consisten
Which of the following economic characteristics is consistent with a grocery store chain?
a. Minimal competition
*b. Extensive competition
c. High net income to sales
d. Differentiated product
4. 04: On a common size basis, which of the following assets is nor
On a common size basis, which of the following assets is normally largest for an electric utility?
a. Accounts receivable
b. Inventory
*c. Property, Plant and Equipment
d. Cash and Marketable Securities
5. 05: On a common size basis, which of the following assets is nor
On a common size basis, which of the following assets is normally largest for a commercial
bank?
*a. Accounts and Notes Receivable
b. Inventory
c. Property, Plant and Equipment
d. Cash and Marketable Securities
1
,Test Bank For Financial Reporting, Financial Statement Analysis and Valuation 10th
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
6. 06: Which of the following is not one of Porterâ™s five forces?
Which of the following is not one of Porter’s five forces?
a. Buyer Power
b. Supplier Power
*c. Threat of Regulation
d. Threat of Substitutes
7. 07: When assessing buyer power using Porterâ™s five forces, whi
When assessing buyer power using Porter’s five forces, which of the following is not consistent
with low buyer power?
a. Brand loyalty
b. Control of distribution channel
*c. Large number of suppliers
d. Low price
8. 08: The second step in financial statement analysis is to identi
The second step in financial statement analysis is to identify the company strategy. Which of the
following is a question an analyst should ask when performing a strategy analysis?
a. Are industry sales growing rapidly or slowly?
b. Do earnings include revenues that appear mismatched with the business model
employed by the firm?
c. Does the industry include a large number of firms selling similar products?
*d. What is the company’s degree of geographical diversification?
9. 09: The third step in financial statement analysis is to assess
The third step in financial statement analysis is to assess the quality of the firm’s financial
statements. Which of the following is a question an analyst should ask when performing this step?
a. Are industry sales growing rapidly or slowly?
*b. Do earnings include revenues that appear mismatched with the business model
employed by the firm?
c. Does the industry include a large number of firms selling similar products?
d. What is the company’s degree of geographical diversification?
10. 10: An example of an intangible asset is:
An example of an intangible asset is:
*a. A patent
b. Land
c. Investment in another company
2
, Test Bank For Financial Reporting, Financial Statement Analysis and Valuation 10th
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
d. Raw material inventory
11. 11: Which of the following would not appear as a liability on th
Which of the following would not appear as a liability on the balance sheet?
*a. A labor contract
b. A note due to a bank
c. Salary due employees at year-end
d. Accounts payable
12. 12: Which of the following assets would appear on the balance sh
Which of the following assets would appear on the balance sheet at an amount greatly below its
fair market value?
a. Inventory
b. Marketable securities
c. Equipment
*d. Brand name
13. 13: The accrual basis of accounting recognizes:
The accrual basis of accounting recognizes:
a. Revenue when cash is received from customers
b. Expenses when paid
*c. Revenue when all or a substantial portion is performed
d. Revenue when contracts are signed
14. 14: Which of the following is not an activity reported in the St
Which of the following is not an activity reported in the Statement of cash Flows?
a. Operating
b. Investing
*c. Manufacturing
d. Financing
15. 15: The cash basis method of accounting can be best described as
The cash basis method of accounting can be best described as:
a. The recording of transactions and adjustments so that debits equal credits.
b. The method that equates assets with liabilities and owners’ equity.
*c. The method that recognizes revenue when money is received and expenses when
money is paid.
d. The method that matches incurred expenses with related revenues when they are
earned.
3
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
1. 01: The tools for studying industry economics does not include:
The tools for studying industry economics does not include:
a. Value chain analysis
b. Classification using Porter’s five forces
*c. Classification of cash flows
d. Economic attributes framework
2. 02: Which of the following is a question an analyst would ask wh
Which of the following is a question an analyst would ask when assessing the quality of a firm’s
financial statements?
a. Are the company’s products designed to meet a specific market segment?
b. Has the firm integrated forward into retailing to final consumers?
c. Is the firm diversified across several geographical markets?
*d. Do earnings include nonrecurring gains or losses?
3. 03: Which of the following economic characteristics is consisten
Which of the following economic characteristics is consistent with a grocery store chain?
a. Minimal competition
*b. Extensive competition
c. High net income to sales
d. Differentiated product
4. 04: On a common size basis, which of the following assets is nor
On a common size basis, which of the following assets is normally largest for an electric utility?
a. Accounts receivable
b. Inventory
*c. Property, Plant and Equipment
d. Cash and Marketable Securities
5. 05: On a common size basis, which of the following assets is nor
On a common size basis, which of the following assets is normally largest for a commercial
bank?
*a. Accounts and Notes Receivable
b. Inventory
c. Property, Plant and Equipment
d. Cash and Marketable Securities
1
,Test Bank For Financial Reporting, Financial Statement Analysis and Valuation 10th
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
6. 06: Which of the following is not one of Porterâ™s five forces?
Which of the following is not one of Porter’s five forces?
a. Buyer Power
b. Supplier Power
*c. Threat of Regulation
d. Threat of Substitutes
7. 07: When assessing buyer power using Porterâ™s five forces, whi
When assessing buyer power using Porter’s five forces, which of the following is not consistent
with low buyer power?
a. Brand loyalty
b. Control of distribution channel
*c. Large number of suppliers
d. Low price
8. 08: The second step in financial statement analysis is to identi
The second step in financial statement analysis is to identify the company strategy. Which of the
following is a question an analyst should ask when performing a strategy analysis?
a. Are industry sales growing rapidly or slowly?
b. Do earnings include revenues that appear mismatched with the business model
employed by the firm?
c. Does the industry include a large number of firms selling similar products?
*d. What is the company’s degree of geographical diversification?
9. 09: The third step in financial statement analysis is to assess
The third step in financial statement analysis is to assess the quality of the firm’s financial
statements. Which of the following is a question an analyst should ask when performing this step?
a. Are industry sales growing rapidly or slowly?
*b. Do earnings include revenues that appear mismatched with the business model
employed by the firm?
c. Does the industry include a large number of firms selling similar products?
d. What is the company’s degree of geographical diversification?
10. 10: An example of an intangible asset is:
An example of an intangible asset is:
*a. A patent
b. Land
c. Investment in another company
2
, Test Bank For Financial Reporting, Financial Statement Analysis and Valuation 10th
Chapter 1. Overview of Financial Reporting, Financial Statement Analysis, and
Valuation.
d. Raw material inventory
11. 11: Which of the following would not appear as a liability on th
Which of the following would not appear as a liability on the balance sheet?
*a. A labor contract
b. A note due to a bank
c. Salary due employees at year-end
d. Accounts payable
12. 12: Which of the following assets would appear on the balance sh
Which of the following assets would appear on the balance sheet at an amount greatly below its
fair market value?
a. Inventory
b. Marketable securities
c. Equipment
*d. Brand name
13. 13: The accrual basis of accounting recognizes:
The accrual basis of accounting recognizes:
a. Revenue when cash is received from customers
b. Expenses when paid
*c. Revenue when all or a substantial portion is performed
d. Revenue when contracts are signed
14. 14: Which of the following is not an activity reported in the St
Which of the following is not an activity reported in the Statement of cash Flows?
a. Operating
b. Investing
*c. Manufacturing
d. Financing
15. 15: The cash basis method of accounting can be best described as
The cash basis method of accounting can be best described as:
a. The recording of transactions and adjustments so that debits equal credits.
b. The method that equates assets with liabilities and owners’ equity.
*c. The method that recognizes revenue when money is received and expenses when
money is paid.
d. The method that matches incurred expenses with related revenues when they are
earned.
3
