Week 1 Quiz: Master Financial Principles and Concepts

Week 1 Quiz Due Oct 29 at 11:59pm Points 10 Questions 20 Time Limit None Attempt History Attempt Time Score LATEST Attempt 1 20 minutes 9 out of 10 Score for this quiz: 9 out of 10 Submitted Oct 29 at 1:09pm This attempt took 20 minutes. 0.5 / 0.5 pts Question 1 Which of the following economic characteristics is consistent with a commercial bank? Low barriers to entry. High levels of research and development. Low profit margin on lending activities. Correct! Correct! Low profit margin on fee-based financial services, such as merger consulting. 0.5 / 0.5 pts Question 2 Accounts payable represent: Amounts which are due to stockholders. Amounts which have been borrowed to finance operations. Amounts which are owed to the company by its customers resulting from credit sales. Amounts which are owed by the company to its suppliers for past purchases. Correct! Correct! 0.5 / 0.5 pts Question 3 Which of the following is an independent entity comprising 15 members and a full-time professional staff that specifies acceptable accounting principles known as IFRS? FASB IASB Correct! Correct! SEC GAAP

0.5 / 0.5 pts Question 4 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. Which of the following is the proper order for these interrelated sequential steps? 4,1,5,2,6,3 Correct! Correct! 1,2,3,4,5,6 4,6,2,5,1,3 1,4,2,5,3,6 0.5 / 0.5 pts Question 5 On the statement of cash flows, depreciation would be classified as? A financing activity. An operating activity. Correct! Correct! An investing activity. A noncash activity. 0.5 / 0.5 pts Question 6 Which of the following is not one of methods used by GAAP for treating value changes? Recognize value changes on the balance sheet and income statement when they are realized in a market transaction Recognize value changes in the income statement when the value changes occur over time, but recognize them on the balance sheet when they are realized in a market transaction Correct! Correct! Recognize value changes on the balance sheet when the value changes occur over time, but recognize them in the income statement when they are realized in a market transaction Recognize value changes on the balance sheet and income statement when they occur over time, even though they are not realized in a market transaction 0.5 / 0.5 pts Question 7 What is the principal activity of security analysts?

To assign credit ratings. To apply IFRS adjustments. To value firms. Correct! Correct! To assess the need for audits. 0.5 / 0.5 pts Question 8 Which of the following is not considered to be a liability? Wages payable. Accounts payable. Notes payable. Cost of goods sold. Correct! Correct! 0.5 / 0.5 pts Question 9 Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement? ? Because it shows the dividends that have been paid to stockholders. Because it indicates a company's ability to generate cash from sales to meet current cash payments for goods or services. Correct! Correct! Because shows the net increase or decrease in cash during the period. Because it gives the most information about how operations have been financed. 0.5 / 0.5 pts Question 10 What level are inputs for estimating fair values are those inputs include quoted prices for similar assets or liabilities in active or inactive markets, other observable information such as yield curves and price indexes, and other observable data such as market- based correlation estimates? Level 1. Level 2. Correct! Correct! Level 3. None of these. 0.5 / 0.5 pts Question 11

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Which of the following economic characteristics is consistent with a pharmaceutical company? Low barriers to entry. High levels of research and development. Correct! Correct! Low profit margins. Low business risk. 0.5 / 0.5 pts Question 12 If a portfolio manager had to estimate the fair value of privately placed bond issues, which of the following would he/she most likely identify as the level of inputs to determine this? Level 1. Level 2. Correct! Correct! Level 3. None of these. 0.5 / 0.5 pts Question 13 The tools for studying industry economics does not include Value chain analysis Classification using Porter's five forces Classification of cash flows Correct! Correct! Economic attributes framework 0.5 / 0.5 pts Question 14 Which of the following is a question an analyst would ask when assessing the quality of a firm's financial statements? Are the company?s products designed to meet a specific market segment? Has the firm integrated forward into retailing to final consumers? Is the firm diversified across several geographical markets? Do earnings include nonrecurring gains or losses? Correct! Correct! 0.5 / 0.5 pts Question 15

At origination which of the following temporary differences would create a deferred tax asset? Tax basis of an asset exceeds its financial reporting basis. Correct! Correct! Tax basis of a liability exceeds its financial reporting basis. Financial reporting basis of an asset is equal to its tax basis. Financial reporting basis of an asset exceeds its tax basis. 0 / 0.5 pts Question 16 Which of these would be considered Property, Plant, and Equipment? Trademark Office Building Correct! Correct! Factory Building You Answered You Answered Goodwill 0.5 / 0.5 pts Question 17 Which financial statement for a business would you look at to determine the company's earnings performance during an accounting period? Balance sheet. Income statement. Correct! Correct! Statement of cash flows. The Management Assessment. 0.5 / 0.5 pts Question 18 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? Are industry sales growing rapidly or slowly? Do earnings include revenues that appear mismatched with the business model employed by the firm? Does the industry include a large number of firms selling similar products? What is the company's degree of geographical diversification? Correct! Correct!

0.5 / 0.5 pts Question 19 Which of the following would not represent an acquisition cost to be added to the purchase price of building: Sales Tax. Cost of grading the land. Correct! Correct! Capital repairs to get the building ready for occupancy. Renovations that would extend the life of the building. 0 / 0.5 pts Question 20 Historical costs include all of the following except: acquisition costs for assets net realizable values for assets. Correct Answer Correct Answer adjusted acquisition costs for assets. You Answered You Answered initial present value for assets and liabilities Quiz Score: 9 out of 10

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Week 1 Quiz

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