ACCT 468 Final - Ch 17

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  1. Which of the following items should be included in the drafting of a standardized engagement agreement?  
    a. Identify the client  
    b. Specify the interest, date, purpose, and intended use of the valuation  
    c. Define the standard value  
    d. All of the above
    d. All of the above
  2. The three valuation approaches are the Income Approach, Market Approach and Cost Approach. Which of the following methods falls under the Market Approach of valuation? 
    A. Adjusted book value  
    B. Guideline (public company) method 
    C. Capitalization of excess earnings method
    D. Discounted future income  
    B. Guideline (public company) method
    (this multiple choice question has been scrambled)
  3. Which of the following is not one of the three general types of valuations? 
    A. Book value approach
    B. Market approach 
    C. Income approach 
    D. Asset-based 
    A. Book value approach
    (this multiple choice question has been scrambled)
  4. Which of the following is not the purpose of a buy-sell agreement? 
    A. Ensure the continuity of management and ownership 
    B. Establish company values for estate tax purposes
    C. Determine the value of the subject company to the specific buyer 
    D. Provide liquidity to deceased or withdrawing owners 
    C. Determine the value of the subject company to the specific buyer
    (this multiple choice question has been scrambled)
  5. What is the correct order of discounting: 
    A. Loss of key person, minority interest, lack of marketability
    B. Minority interest, lack of marketability, loss of key person 
    C. Lack of marketability, loss of key person, minority interest 
    D. Order does not matter
    A. Loss of key person, minority interest, lack of marketability
    (this multiple choice question has been scrambled)
  6. Generally speaking "book value" is considered to be:  
    A. Not really a valuation method. 
    B. A good valuation method but it usually provides a conservative measure of value.  
    C. The best measure of value because it reflects actual accounting measurements.  
    d. None of the above.
    A. Not really a valuation method.
    (this multiple choice question has been scrambled)
  7. "Equitable distribution" in divorce cases is driven by:    
    A. Individual state laws.  
    B. Supreme Court rulings.  
    C. The Uniform Commercial Code nationally.  
    d. None of the above.
    A. Individual state laws.
    (this multiple choice question has been scrambled)
  8. Which of the following is not one of the valuation methods used for business valuations? 
    a. Asset-based Approach 
    b. Income Approach 
    c. Market Approach 
    d. All of the above are valuation methods
    d. All of the above are valuation methods
  9. Which of the following is not a discount or premium applied to business valuations?  
    a. Minority interest discount 
    b. Lack of marketability discount 
    c. Flow-through business premium 
    d. Loss of a key person discount 
    e. All of the above are discounts or premiums that can be applied to business valuations
    e. All of the above are discounts or premiums that can be applied to business valuations
  10. Which of the following is not a general type of valuation? 
    A. Asset-based Approach 
    B. Liability-based Approach 
    C. Market Approach
    D. Income Approach 
    B. Liability-based Approach
    (this multiple choice question has been scrambled)
  11. A key issue in computing the valuation of a business is the percentage of ownership interest being valued. (T/F)
    True
  12. An engagement agreement is necessary in any valuation or client-related undertaking because it 
    a. Clearly sets forth the expectations of the business valuator and client  
    b. Reduces the chance for misunderstanding and malpractice litigation and claims against the business valuator. 
    c. Increases the likelihood of the valuator being paid since it establishes a clear obligation on behalf of the client 
    d. All of the above
    d. All of the above
  13. The market valuation approach is used to value asset-intensive business such as retail and manufacturing, focusing on what the equipment and real estate are worth. 
    True/False
    False
  14. The asset-based approach is a type of valuation generally used to: 
    A. Value asset-intensive businesses such as retail and manufacturing.
    B. Value companies with many liabilities. 
    C. Value businesses with very few assets.
    D. Value service companies. 
    A. Value asset-intensive businesses such as retail and manufacturing.
    (this multiple choice question has been scrambled)
  15. Which of the following are methods under the Market Approach? 
    a. Guideline (public company) method 
    b. Market data method 
    c. Past transactions method 
    d. All of the above
    d. All of the above
  16. . The most common measure of value is:  
    A. Intrinsic value.
    B. Fair market value.  
    C. Historical cost value.
    d. None of the above is true.
    B. Fair market value.
    (this multiple choice question has been scrambled)
  17. Which is not one of the three main valuation methods:  
    A. All are valuation methods.
    B. The market approach.  
    C. The cost approach.  
    D. The income approach.  
    A. All are valuation methods.
    (this multiple choice question has been scrambled)

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redheadsrockyeah
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ACCT 468 Final - Ch 17
Updated:
2017-12-05 17:58:45
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ACCT 468 Final 17
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ACCT 468 Final - Ch 17
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