Question #16
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 7
Status: Correct
Correct Answer: B
Question
Notes to financial statements contain:
Answer Choices:
A. important information about the firm's accounting practices and basis of presentation
B. discussion of the firm's accounting practices and basis of presentation
C. a description of the firm’s financial condition and future prospects. Joe Dentice has an opportunity to buy 5% of Gold Star Oil, Inc., a closely held oil company. He wants to value the company so as to make a decision on a fair price to pay for the investment
Explanation
A number of important disclosures regarding a firm's accounting practices and the basis
on which income and expense are recognized are contained in the footnotes to the
financial statements. An overview by management of the company's past, present, and
future can be found in the Management discussion and analysis (MD&A) section of a
financial statement.
(Module 19.1, LOS 19.e)
Joe Dentice has an opportunity to buy 5% of Gold Star Oil, Inc., a closely held oil company.
He wants to value the company so as to make a decision on a fair price to pay for the
investment.