Question 1

What is comprehensive income?

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Question 2

What is the principal activity of security analysts?

Accepted Answer

A)  To assign credit ratings. 
B)  To apply IFRS adjustments. 
C)  To value firms. 
D)  To assess the need for audits.

Question 3

Which of the following is not considered to be a liability?

Accepted Answer

A)  Wages payable. 
B)  Accounts payable. 
C)  Notes payable. 
D)  Cost of goods sold.

Question 4

The Second stepin financial statement analysis requires businesses to analyze strategies that will__________________________________________________ itself from the firms competitors

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Question 5

All of the following are the building blocks for financial statement analysis except:

Accepted Answer

A)  Targeting growth opportunities that diversify exchange rates, risk exposure, and political uncertainty. 
B)  Describing strategies that a firm pursues to differentiate itself from competitors in order to evaluate competitive advantages, sustainability of the firm's earnings, and its risks. 
C)  Evaluating the financial statements, including the accounting concepts and methods
That underlie them and the quality of the information they provide. 
D)  Identification of the economic characteristics of the industries and the relation of those economic characteristics to the various financial statement ratios.

Question 6

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 7

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

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Question 8

Another important step in financial statement analysis is to assess the quality of a firm's ________________________________________ and if necessary adjust them for such characteristics as sustainability or comparability.

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Question 9

Prepare an analysis of the automobile manufacturing industry using Porter's five forces framework.For each component force provide support for your conclusion.In addition,at the completion of your analysis provide a conclusion,along with support,of whether you expect the automobile industry to report high or low profitability in the near future.

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Question 10

The cash basis method of accounting can be best described as:

Accepted Answer

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.

Question 11

______________________________ relates to the relative number of buyers and sellers in a particular industry.

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Question 12

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.

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Question 13

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

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Question 14

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

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Question 15

Nickel Industries reported the following amounts on its balance sheet on December 31,2014:
 $$\begin{array} { | l | r | } 
\hline \text { Cash } & \text { \$180,000 } \
\hline \text { Nates payable } & 100,000 \
\hline \text { Inventary } & 325,000 \
\hline \text { Cantributed Capital } & 750,000 \
\hline \text { Net Praperty, Plant a Equipment } & 600,000 \
\hline \text { Accaunts Receivable } & 30,000 \
\hline \text { Accuunts Payable } & 75,000 \
\hline \text { Retained Earnings } & ? \
\hline
\end{array}$$ 
Required: Required:
1.What is the amount of Nickel's total assets at the end of 2011?
2.Identify the items listed above that are liabilities.
3.What is the amount of Nickel's retained earnings at the end of 2011?
4.Prepare a balance sheet for Nickel Industries using U.S.GAAP as of December 31,2011.
5.Nickel Industries wishes to purchase merchandise from your company on account.The amount of the purchases would probably be about $11,000 per month,and the terms would require Nickel to make payment in full within 30 days.Would you recommend that your company grant credit to Nickel under these terms? Explain the reasoning for your response.

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Question 16

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

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Question 17

What is an industry's value chain?

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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

Net income is equal to:

Accepted Answer

A)  Assets minus Liabilities 
B)  Revenues and Gains minus Expenses and Losses 
C)  Shareholders' Equity minus Assets 
D)  Revenues and Assets minus Expenses and Liabilities

Question 20

Most financial statement analysis aims to assess a firm's ____________________ and ____________________.

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