Financial Statement Analysis Module 1 Test
Module 1
Framework for Analysis and Valuation
Learning Objectives – coverage by question
Multiple Choice
Exercises
Problems
Essay Questions
LO1 Identify and discuss the users and suppliers of financial statement information.
1-2
-
1
1-2
LO2 Identify and explain the four financial statements, and define the accounting equation.
3-19
1-8
2-5
3
LO3 Explain and apply the basics of profitability analysis.
20-25
9-10
6-7
4
LO4 Describe business analysis within the context of a competitive environment.
26-27
-
8
-
LO5 Describe the accounting principles and regulations that frame financial statements.
28-30
-
9-10
5
Module 1: Framework for Analysis and Valuation
Multiple Choice
Topic: Users of Financial Statement Information
LO: 1
1. Which of the following groups would likely not be interested in the financial statements of a large public company such as Berkshire Hathaway?
a. Shareholders
b. Employees
c. Competitors
d. Taxing agencies
e. None of the above
Answer: e
Rationale: All of these parties would use the financial statements, albeit in different ways and for different purposes.
Topic: Users of Financial Statement Information
LO: 1
2. The SEC adopted Regulation FD, to curb public companies practice of:
a. Routinely filing extensions for annual reports (Form 10-k)
b. Selectively disclosing information
c. Reporting pro forma (non-GAAP) numbers
d. Hiring auditors for non-audit services such as consulting engagements
e. None of the above
Answer: b
Rationale: Reg FD reads as follows: “Whenever an issuer discloses any material nonpublic information regarding that issuer, the issuer shall make public disclosure of that information . . . simultaneously, in the case of an intentional disclosure; and . . . promptly, in the case of a non-intentional disclosure.”
Topic: Components of the Balance Sheet
LO: 2
3. A list of assets, liabilities and equity can
Framework for Analysis and Valuation
Learning Objectives – coverage by question
Multiple Choice
Exercises
Problems
Essay Questions
LO1 Identify and discuss the users and suppliers of financial statement information.
1-2
-
1
1-2
LO2 Identify and explain the four financial statements, and define the accounting equation.
3-19
1-8
2-5
3
LO3 Explain and apply the basics of profitability analysis.
20-25
9-10
6-7
4
LO4 Describe business analysis within the context of a competitive environment.
26-27
-
8
-
LO5 Describe the accounting principles and regulations that frame financial statements.
28-30
-
9-10
5
Module 1: Framework for Analysis and Valuation
Multiple Choice
Topic: Users of Financial Statement Information
LO: 1
1. Which of the following groups would likely not be interested in the financial statements of a large public company such as Berkshire Hathaway?
a. Shareholders
b. Employees
c. Competitors
d. Taxing agencies
e. None of the above
Answer: e
Rationale: All of these parties would use the financial statements, albeit in different ways and for different purposes.
Topic: Users of Financial Statement Information
LO: 1
2. The SEC adopted Regulation FD, to curb public companies practice of:
a. Routinely filing extensions for annual reports (Form 10-k)
b. Selectively disclosing information
c. Reporting pro forma (non-GAAP) numbers
d. Hiring auditors for non-audit services such as consulting engagements
e. None of the above
Answer: b
Rationale: Reg FD reads as follows: “Whenever an issuer discloses any material nonpublic information regarding that issuer, the issuer shall make public disclosure of that information . . . simultaneously, in the case of an intentional disclosure; and . . . promptly, in the case of a non-intentional disclosure.”
Topic: Components of the Balance Sheet
LO: 2
3. A list of assets, liabilities and equity can