QUESTION: 105

A control owner or potential owner might make control adjustments, but a minority owner, generally, could not force the same changes. Therefore, control adjustments normally would be made only in the case a controlling interest valuation, unless there was reason to believe that the changes were imminent and probable. These include all of the following EXCEPT:

Excess or deficient compensation and perquisites
Gains, losses or cash realization from sale of excess assets
Discounted operations
Elimination of operations involving company insiders (e.g. employment, non-marketrate leases)

Answer(s): C

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QUESTION: 106

Most companies carry accounts receivable and deduct some allowance for potentially uncollectible accounts. The typical policy is to___________ the allowance for doubtful accounts at the end of each month by a percentage of that month’s___________ .

Increase, Credit sales
Increase, Credit purchases
Decrease, Credit sales
Decrease, Unearned Revenue

Answer(s): A

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QUESTION: 107

One way is to compare the historical percentage of bad debt losses from past credit sales with the percentage current credit sales being charged to bad debt expense to see if too little or too much is currently being charged. Another approach is:

To compare the unearned revenue schedule allowance relative to the amount of overdue accounts
To compare the aged account receivable schedule allowance relative to the amount of overdue accounts
To compare the aged account receivable schedule allowance relative to the amount of expired accounts
To compare the aged account receivable schedule allowance relative to the amount of undue accounts

Answer(s): B

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QUESTION: 108

The analyst should keep in mind that (1) if earning are adjusted from LIFO to FIFO and (2) if after-tax income or after-tax cash flow are used as the appropriate measure of economic income, then the adjustment should be net of:

Net difference between the Earnings and income tax liability adjustments
Net difference between the inventory and income tax liability adjustments
Income tax effect (either additional taxes or benefit) associated with it
GDP rate (either additional taxes or benefit) associated with it

Answer(s): C

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QUESTION: 105

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QUESTION: 108