Exam 1: Overview of Financial Reporting, financial Statement Analysis, and Valuation

Opinions on the effectiveness of the internal control system and the fairness of the amounts reported in the financial statements are known as:

Obtaining a competitive advantage by being the first company to introduce new concepts or ideas is referred to as ________________________________________.

The following selected financial data pertain to four companies: a hotel,a travel agency,a meat packing company and a pharmaceutical company. Required: Match each with the financial information and explain why you made your choice as you did.

Tremble Company manufactures outdoors wear for women.During 2014,the company reported the following items that affected cash. Required: Indicate whether each of these items is a cash flow from operating activities (O),investing activities (I),or financing activities (F). _____A.Paid cash for supplies _____B.Purchased equipment by paying cash _____C.Collected cash on account from customers _____D.Paid dividends to stockholders _____E.Paid suppliers for fabric _____F.Borrowed money from a bank on a long-term note _____G.Paid interest to bank on the note _____H.Paid wages to employees _____I.Sold shares of common stock to new stockholders    

The _____________________________________________ defines more clearly the explicit responsibility of managers for financial statements,the relation between the independent auditor and the firm audited and the kinds of services permitted and not permitted.

All of the following are principal provisions of the Sarbanes-Oxley Act of 2002 except:

Which financial statement would you look at to determine whether a company will be able to pay for the goods when payment is due in 30 days? 

What are the six interconnected activities related to financial statement analysis?

Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011. REQUIRED: (a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form. (b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.

Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement?

Under the Sarbanes-Oxley Act of 2002,financial statements must include both a Management Assessment and an Assurance Opinion.What information do the Management Assessment and an Assurance Opinion provide to financial statement users?

All of the following are reasons that pharmaceutical companies have higher barriers for entry than grocery stores except:

Which of the following economic characteristics is consistent with a grocery store chain?

When a firm attempting to create unique products or services for particular market niches,in order to achieve relatively high profit margins,this is best known as

What are three activities reported in the statement of cash flows and what information does each activity provide?

On the statement of cash flows,depreciation would be classified as?

Accounts payable represent: 

What three financial statements are prepared by business firms and what information does each provide?

The tools of effective financial statement analysis are useful for assessing whether to extend ____________________ to a firm,either for a short-term or for a long-term.

The following steps make up the steps in financial statement analysis. 1.Identify the strategies the firm pursues to gain and sustain a competitive advantage. 2.Analyze the current profitability and risk of the firm using information in the Financial statements. 3.Value the firm. 4.Identify the economic characteristics and competitive dynamics of the industry in Which a particular firm participates. 5.Assess the quality of the firm's financial statements and,if necessary,adjust them for Such desirable characteristics as sustainability or comparability. 6.Prepare forecasted financial statements.