Jamika Chapter 16 ESSAY QUESTIONS

Fill in the Blank Question The basic is referred to as the fundamental model of business valuation. (Enter one word per blank)

In conducting a B/C analysis, (a) why is it usually necessary to take a specific viewpoint in categorizing cost, benefit, disbenefit estimates; and (b) what are two specific viewpoints that you can identify if the situation is a financial transaction between you and another person? Between your company and an international customer?

TRUE OR FALSE: Read each sentence carefully and determine whether the statement True or False. Write your answers in the space provided before the number. 1. Financial statement analysis uses computational and analytical techniques to evaluate the company's risks, performance, financial health, and future prospects with the objective of making economic decisions. 2. Return on asset is an operational efficiency ratio. 3. Profitability ratios measure the ability of the company's assets to generate sales. 4. Gross profit margin provides an indication of the company's average pricing policy 5. Given equal gross profit margin, the company with the lower operating income margin has higher operating expenses as a percentage of sales and has leaner operations. Written Works Below are the comparative Statement of Comprehensive Income & Statement of Financial Position of Ellane Company & Lanie Company: Statement of Comprehensive Income Ellane Company 2013 Melanie Company 2014 2013 2014 Net Sales…

1. What is Business Valuation Standard? 2. How that standard may apply to a given circumstance in a business valuation engagement?

1. What are the Uniform Standards of Professional Appraisal Practice? 2. How does it apply to today Business practices? 3. How that standard may apply to a given circumstance in a business valuation engagement?

What is the accounting equation and discuss how it impacts on the operations of a business?                                                                                                                                                       2. Why is liquidity critical for a business and how might this affect decision making?                                   3. Why is investment appraisal important to a business? Use examples to support your reasons.                        4. What is meant by relevant costs and critically explain their role in decision making.                                             5.  Discuss the benefits of the information contained in the Income Statement/Profit and Loss Account.

The primary objective of financial accounting is Group of answer choices A. to serve the decision-making needs of the company’s management. B. to determine whether to build, buy or rent a building. C. to provide financial statements to help external users analyze and interpret an organization’s activities. D. to provide information on the costs and benefits of producing a new product.

Answer the following questions in multiple-choice answers:   1. The book value of the equipment currently owned by a firm is an example of a(n): a. future cost. b. differential cost. c. comparative cost. d. opportunity cost. e. sunk cost.   2. An accounting information system should be designed to provide information that is useful. To be useful the information must be: a. qualitative rather than quantitative. b. unique and unavailable through other sources. c. historical in nature and not purport to predict the future. d. marginal between two alternatives. e. relevant, accurate, and timely.   3. Factors in a decision problem that cannot be expressed in numerical terms are: a. qualitative in nature. b. quantitative in nature. c. predictive in nature. d. sensitive in nature. e. uncertain in nature.   4. An opportunity cost may be described as: a. a foregone benefit. b. a historical cost. c. a specialized…

After reading the case, you will choose one side to assist (you’ve been hired by Dave James OR you’ve been hired by the three Branson brothers). Prepare a Business Valuation Report.  Explain the reasoning for applying any premiums or discounts that other business valuators might use. Discuss limitations, if any, in your report. Given that Branson Trucking possesses a large amount of tangible assets, an asset-based approach can provide a baseline valuation. This method is able to compute the company's net asset value by adding the fair market value of its assets and subtracting liabilities.  Keeping this information in mind, the highlighted information provided in the scenario is as follows:  Total Assets (Fair Market Value): $10,500,000 Total Liabilities: $5,100,000 Net Asset Value: $5,400,000 Net Income (2020): $1,172,000 Retained Earnings: $2,065,000 Application of Premiums and Discounts Control Premium: A control premium is applied to reflect the value of having a controlling…

An internal accounting system should: a. provide information to enable costs to be minimized b. provide financial accounting data for external reporting purposes c provide management accounting information for decision-making d. provide data for tax purposes e. all of the above

Listed below are nine terms and definitions associated with the FASB’s conceptual framework. Terms Definitions 1. Completeness a. Requires the consideration of the costs and value of information. 2. Comparability b. Ability to make comparisons between firms. 3. Neutrality c. Comprehending the meaning of accounting information. 4. Understandability d. Including all information necessary to report the business activity. 5. Cost effectiveness  e. The business will last indefinitely unless there is evidence otherwise. 6. Verifiability  f. Recording transactions only for the company. 7. Decision g. Implies consensus among different measures. 8. Economic entity assumption  h. Accounting should be useful in making decisions. 9. Going concern assumption  i. Accounting information should not favor a particular group. Required:Pair each term with its related definition.

1 Analyze the major pros and cons of a single-step income statement and a multistep income statement. Identify at least two critical items of a multistep income statement that is useful to creditors. Provide a rationale for your response.