Test Bank for Financial Reporting, Financial Statement Analysis and Valuation 10th Edition by Wahlen
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Course
Financial Reporting
Institution
Financial Reporting
Test Bank for
Chapter 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation
Overview of Financial Statement Analysis
Step 1: Identify the Industry Economic Characteristics
Step 2: Identify the Company Strategies
Step 3: Assess the Quality of the Financial Stateme...
Indicate the answer choice that best completes the statement or answers the question.
1. Which forces typically represent vertical competition in a value chain?
a. Potential entry and substitutes.
b. Buyer power and rivalry among existing firms
c. Supplier power and potential entry.
d. Buyer power and supplier power
2. Cash and cash equivalents are considered ______ assets. Select the best term to complete the sentence.
a. Intangible
b. Monetary
3. On the statement of cash flows, depreciation would be classified as?
a. A financing activity.
b. An operating activity.
c. An investing activity.
d. A noncash activity.
4. How easily can customers switch to substitute products is a question one might ask when assessing the ______.
a. threat of entrants
b. threat of substitutes
5. The five economic attributes that are normally studied are demand, supply, manufacturing, ______, and investing
and financing. Select the best term to complete the sentence.
a. marketing
b. sustainability
6. The threat of new entrants is measured by whether there are entry barriers, such as capital investment, ______,
patents, or regulation that inhibit new entrants. Select the best term to complete the sentence.
a. labor shortages
b. technological expertise
7. The accrual basis of accounting recognizes:
a. Revenue when cash is received from customers
b. Expenses when paid
c. Revenue when all or a substantial portion is performed
d. Revenue when contracts are signed
8. Extraordinary gains and losses arise from events that have all the following characteristics except:
a. They are unusual given the nature of the firm’s activity.
b. They are nonrecurring.
c. They are material in amount.
d. They result from terminated involvement in a line of business.
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