Business Valuations

Business Valuations


1. (TCO G) The most common measure of value is: (Points : 2)

Fair market value.

Intrinsic value.

Historical cost value.

Majority stockholder value.

None of the above is true.

2. (TCO G) One type of agreement that can have a direct impact on the valuation of parts of a closely held business is a: (Points : 2)

Bankruptcy agreement.

Medical malpractice agreement.

Buy-sell agreement.

Discounted cash flow agreement.

None of the above is correct.

3. (TCO G) The most commonly accepted methods of business valuation use some form of: (Points : 2)

Balance sheet analysis.

Historical cost basis.

Book value method.

Income statement approach.

4. (TCO G) The conclusions presented in FASB No. 157 support which FASB Conceptual Framework? (Points : 2)

FASB Conceptual Framework No. 2

FASB Conceptual Framework No. 6

FASB Conceptual Framework No. 7

All of the above

None of the above

5. (TCO G) The creation of business valuation standards has led to: (Points : 2)

Fewer lawsuits than before.

Greater professionalism within the valuation community.

Higher fees for business valuation professionals.

Greater understanding among the public of the results of business valuation reports.

None of the above.

6. (TCO G) In a typical business valuation report, one exhibit that is seldom used is: (Points : 2)

Limiting conditions.

Definitions of valuation terms.

Ratio analysis of the company.

Common size balance sheets of the company.

None of the above.

7. (TCO G) “Equitable distribution” in divorce cases is driven by: (Points : 2)

The Uniform Commercial Code nationally.

Individual state laws.

Supreme Court rulings.

Professional standards.

None of the above.

8. (TCO G) “Investment value” is: (Points : 2)

The general market value of a business.

The market value of a listed company.

The value of the business to the current owner.

The value of the business to a specific buyer.

None of the above.

9. (TCO G) IRS Rev. Rul. 59-60: (Points : 2)

Deals with the valuation of closely held businesses

Provides a list of eight factors that should be considered in valuing a closely held business

Is particularly useful for valuing closely held businesses in estate and gift tax situations

All of the above

None of the above

10. (TCO G) Probably the most comprehensive source of information on financial statements and credit analysis by industry is: (Points : 2)

The American Institute of Certified Public Accountants (AICPA).

The Association of Certified Fraud Examiners (ACFE).

The Institute of Management Accounting (IMA).

The Risk Management Association (RMA)