Question 1

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.

Accepted Answer

The answer of The _____________________________________________ defines more clearly the explicit...

Question 2

Which forces typically represent horizontal competition in a value chain?

Accepted Answer

A)  Rivalry among existing firms and supplier power. 
B)  Potential entry and buyer power. 
C)  Substitutes and potential entry. 
D)  Buyer power and supplier power.

Question 3

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

Accepted Answer

A)  Low barriers to entry. 
B)  High levels of research and development. 
C)  High profit margins. 
D)  Low capital intensity.

Question 4

___________________________________ equals net income for a period plus or minus the changes in shareholders' equity accounts other than from net income and transactions with owners.

Accepted Answer

The answer of ___________________________________ equals net income for a period...

Question 5

Which of the following would not appear as a liability on the balance sheet?

Accepted Answer

A)  A labor contract 
B)  A note due to a bank 
C)  Salary due employees at year-end 
D)  Accounts payable

Question 6

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

Accepted Answer

A)  At least one member of the audit committee of the board of directors must be a "financial expert." 
B)  The lead audit or coordinating partner and the reviewing partner of the public accounting firm must rotate, or change, every five years. 
C)  The firm's chief executive officer and the chief financial officer must issue a statement along with the audit report stating that the financial statements and notes fairly present the operations and financial position of the firm. 
D)  The FASB has oversight and enforcement authority over the SEC.

Question 7

Which of the following economic characteristics is consistent with a pharmaceutical company?

Accepted Answer

A)  Low barriers to entry. 
B)  High levels of research and development. 
C)  Low profit margins. 
D)  Low business risk.

Question 8

The prospectus must be filed with the ________ before the company can sell new issues of stocks or bonds.

Accepted Answer

The answer of The prospectus must be filed with the...

Question 9

Labor contracts and purchase order commitments are examples of ____________________ contracts.

Accepted Answer

The answer of Labor contracts and purchase order commitments are...

Question 10

The tools for studying industry economics does not include:

Accepted Answer

A)  Value chain analysis 
B)  Classification using Porter's five forces 
C)  Classification of cash flows 
D)  Economic attributes framework

Question 11

An example of an intangible asset is:

Accepted Answer

A)  A patent 
B)  Land 
C)  Investment in another company 
D)  Raw material inventory

Question 12

Which SEC form may be the best place to start learning about the economics of an industry and the particular strategy a firm has selected for competing in the industry?

Accepted Answer

A)  Form 8-K 
B)  Form 10-K 
C)  Form MD&A 
D)  Form FSAP

Question 13

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.

Accepted Answer

The answer of The tools of effective financial statement analysis...

Question 14

Nonmonetary assets include assets that are ____________________, such as inventories, and assets that are ____________________ such as brand names.

Accepted Answer

The answer of Nonmonetary assets include assets that are ____________________,...

Question 15

Under the Sarbanes-Oxley Act ____________________ assumes responsibility for establishing and maintaining adequate internal control structure and procedures.

Accepted Answer

The answer of Under the Sarbanes-Oxley Act ____________________ assumes responsibility...

Question 16

Which of the following is not one of Porter's five forces?

Accepted Answer

A)  Buyer Power 
B)  Supplier Power 
C)  Threat of Regulation 
D)  Threat of Substitutes

Question 17

When attempting to identify the economic characteristics of the industry in which a particular firm participates an analyst might ask which of the following questions?

Accepted Answer

A)  Does technological change play an important role in the firm maintaining a competitive advantage? 
B)  Has the firm diversified across several geographic markets? 
C)  Has the firm recognized revenues at the proper time? 
D)  Has the firm structured transactions to make it look more profitable than economic conditions suggest?

Question 18

Which form does the balance sheet equation take in the United Kingdom?

Accepted Answer

A)  Noncurrent Assets + Noncurrent Liabilities = Shareholders' Equity 
B)  Revenues - Expenses = Shareholders' Equity 
C)  Noncurrent Assets + [Current assets - Current Liabilities] - Noncurrent Liabilities = Shareholders' Equity 
D)  Noncurrent Assets - Current assets = Noncurrent Liabilities - Current Liabilities + Shareholders' Equity

Question 19

How easily can customers switch to substitute products is a question one might ask when assessing the ___________________________________.

Accepted Answer

The answer of How easily can customers switch to substitute...

Question 20

Under the ____________________ basis of accounting, a firm recognizes revenue when it performs all or a substantial portion, of the services it expects to perform and receives either cash or a receivable.

Accepted Answer

The answer of Under the ____________________ basis of accounting, a...

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