Question 1

Which of the following would not inhibit new entrants into a market?
A) Existing technological expertise.
B) Large required capital investment.
C) Lack of rivalry among current participants.
D) Existing patented technology.

Accepted Answer

Lack of rivalry among current participants would actually encourage new entrants rather than inhibit them as it indicates there is room for more competition. The other choices would all be barriers to entry and would inhibit new entrants.

Question 2

When identifying the strategies that a particular firm pursues to gain a competitive advantage it is important to determine if its products are designed to meet the needs of a specific market segment or are they intended for a _____________________________________________.

Accepted Answer

The answer of When identifying the strategies that a particular...

Question 3

The fourth step in financial statement analysis is using the financial statements to analyze the current ____________________ and ____________________ of the firm.

Accepted Answer

The answer of The fourth step in financial statement analysis...

Question 4

The ______________________________ sets forth the sequence of activities involved in the creation, manufacture and distribution of its products and services.

Accepted Answer

The answer of The ______________________________ sets forth the sequence of...

Question 5

Labor contracts and purchase order commitments are examples of ____________________ contracts.

Accepted Answer

The answer of Labor contracts and purchase order commitments are...

Question 6

The tools of effective financial statement analysis are also useful for assessing whether to extend ____________________ to a firm, either for a short-term or for a long-term.

Accepted Answer

The answer of The tools of effective financial statement analysis...

Question 7

Which of the following activities reported in the Statement of Cash Flows is a financing activity?
A) Repayment of outstanding debt.
B) Investing in equity securities of other companies.
C) Payment of dividends.
D) Issuing debt.

Accepted Answer

The answer of Which of the following activities reported in...

Question 8

The higher the value added from any activity, the higher should be the ____________________ from engaging in that activity.

Accepted Answer

The answer of The higher the value added from any...

Question 9

The threat of new entrants is measured by whether there are entry barriers, such as capital investment, ________________________________________, patents, or regulation that inhibit new entrants.

Accepted Answer

The answer of The threat of new entrants is measured...

Question 10

Another important step in financial statement analysis is to assess the quality of a firm's ________________________________________ and if necessary adjust them for such characteristics as sustainability or comparability.

Accepted Answer

The answer of Another important step in financial statement analysis...

Question 11

Resources that have the potential for providing a firm with future economic benefits are called ____________________.

Accepted Answer

The answer of Resources that have the potential for providing...

Question 12

Normally, intense rivalries have a tendency to reduce ____________________.

Accepted Answer

The answer of Normally, intense rivalries have a tendency to...

Question 13

Current assets are defined as
A) cash and cash equivalents.
B) all assets expected to be quickly used by the firm.
C) cash and other assets that the firm expects to sell or consume during the normal operating cycle of a business, usually one year.
D) cash and other assets that the firm expects maintain for a period including the normal operating cycle of a business, usually one year.

Accepted Answer

Current assets are assets that are expected to be sold or consumed during the normal operating cycle of a business, usually one year. This includes cash, cash equivalents, short-term investments, accounts receivable, inventory, and prepaid expenses. Option A only includes cash and cash equivalents, which is not a complete definition of current assets. Option B is too vague and does not specify a time frame. Option D is incorrect because it includes assets that are held for a longer period than one year.

Question 14

____________________ assets include the rights established by law or contract to the future use of property.

Accepted Answer

The answer of ____________________ assets include the rights established by...

Question 15

Assets that do not represent a claim to a fixed amount of cash are called ____________________ assets.

Accepted Answer

The answer of Assets that do not represent a claim...

Question 16

Which of the following is not an expense of a business?
A) Depreciation
B) Dividends
C) Salaries
D) Advertising

Accepted Answer

Depreciation, salaries, and advertising are all expenses that a business incurs in order to generate revenue or operate. Dividends, on the other hand, are payments made to shareholders as a distribution of profits. While dividends may reduce the amount of retained earnings a business has for future investments or growth, they are not considered an expense in the same way as the other options.

Question 17

Obtaining a competitive advantage by being the first company to introduce new concepts or ideas is referred to as ________________________________________.

Accepted Answer

The answer of Obtaining a competitive advantage by being the...

Question 18

The five economic attributes that are normally studied are demand, supply, manufacturing, ____________________ and investing and financing.

Accepted Answer

The answer of The five economic attributes that are normally...

Question 19

Which of the following is not a characteristic of an extraordinary item?
A) Material in amount.
B) Nonrecurring.
C) Unusual given the nature of the firm's activities.
D) Requires a cash outflow.

Accepted Answer

A cash outflow is not a required characteristic of an extraordinary item. Extraordinary items are defined by the Financial Accounting Standards Board as events or transactions that are unusual in nature and infrequent in occurrence. This definition does not specify a cash outflow requirement.

Question 20

The first step in financial statement analysis is to identify the __________________________________________________ of the industry in which a firm participates.

Accepted Answer

The answer of The first step in financial statement analysis...

Quiz 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Which of the following would not inhibit new entrants into a market?