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The accrual basis of accounting recognizes a

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1. 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
2. The cash basis method of accounting can be best described as:
   a. The recording of transactions and adjustments so that debits equal credits.
   b. The method that equates assets with liabilities and owners' equity.
   c. The method that recognizes revenue when money is received and expenses when money is paid.
   d. The method that matches incurred expenses with related revenues when they are earned.
3. A value chain for an industry sets forth
   a.The layers of management the needed to be successful
   b. Sequence of activities involved in the creation, manufacture, and distribution of its products.
   c. Sequence of activities involved in a firm's research and development activities.
   d. Whether the industry is horizontally or vertically integrated.
4. Which of the following economic characteristics is consistent with a commercial bank?
   a. Low barriers to entry.
   b. High levels of research and development.
   c. Low profit margin on lending activities.
   d. Low profit margin on fee-based financial services, such as merger consulting.
5. Which of the following economic characteristics is consistent with a pharmaceutical company?
   a. Low barriers to entry.
   b. High levels of research and development.
   c. Low profit margins.
   d. Low business risk.
6. Which of the following economic characteristics is consistent with a grocery store chain?
   a. Low barriers to entry.
   b. High levels of research and development.
   c. High profit margins.
   d. Low capital intensity
7. 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
8. Which of the following is nota 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
9. Which of the following activities is an operating activity?a. Collections of accounts receivable.
   b. Investing in equity securities of other companies.
   c. Payment of dividends.
   d. Issuing common stock
10. All of the following are the building blocks for financial statement analysis except:
    a. Targeting growth opportunities that diversify exchange rates, risk exposure, and political uncertainty.
    b. Describing strategies that a firm pursues to differentiate itself from competitors in order to evaluate competitive advantages, sustainability of the firm's earnings, and its risks.
    c. Evaluating the financial statements, including the accounting concepts and methods that underlie them and the quality of the information they provide.
    d. Identification of the economic characteristics of the industries and the relation of those economic characteristics to the various financial statement ratios.