1. The second step in financial statement analysis is to identify the company strategy. Which of the following is a question an analyst should ask when performing a strategy analysis?

What is the company's degree of geographical diversification?

2. Which of the following is not one of Porter's five forces?

Threat of Regulation

3. Which of the following assets would appear on the balance sheet at an amount greatly below its fair market value?

Brand name

4. The cash basis method of accounting can be best described as:

The method that recognizes revenue when money is received and expenses when money is paid.

5. When attempting to identify the economic characteristics of the industry in which a particular firm participates an analyst might ask which of the following questions?

Does technological change play an important role in the firm maintaining a competitive advantage?

6. Current assets are defined as:

Cash and other assets that the firm expects to sell or consume during the normal operating cycle of a business, usually one year.

7. Which of the following assets appears on the balance sheet at Historical cost?

Equipment

8. Shareholders' equity consists of what three components:

Contributed capital, accumulated other comprehensive income, and retained earnings.

9. The use of acquisition cost as a valuation method is justified on the basis that acquisition cost is:

objective

10. Which of the following is not one of methods used by GAAP for treating value changes?

Recognize value changes in the income statement when the value changes occur over time, but recognize them on the balance sheet when they are realized in a market transaction