NACVA NACVA Certifications CVA Questions & Answers

• Question 171:

  The accountant express limited assurance in _____________ that there are no material modifications that should be made to the statements in order for them to be in conformity with generally accepted accounting principles.

  A. Reviewed statements

  B. Audited statements

  C. Compiled statements

  D. Financial statements

  Correct Answer: A

• Question 172:

  Valuation analysts prefer to work with audited financial statements because of their completeness and reliability. There are various levels of scrutiny represented by audited, reviewed, and compiled financial statements. The same might have:

  A. Only one level of scrutiny

  B. Different level for the same period

  C. Different level of scrutiny performed for different years

  D. It entirely depends on the situation and valuation requirements

  Correct Answer: C

• Question 173:

  When asking for historical financial statements on the subject property, one should endeavor to study statements during a __________________. The most commonly used period is five years, but this should not be used as a rote number of years.

  A. Relevant period

  B. Current period

  C. Audited period

  D. Compiled Period

  Correct Answer: A

• Question 174:

  According to the American institute of Certified Public Accountants (AICPA), the term financial statement refers to:

  A. "A presentation of internal accounting data, derived from accounting records and intended to communicate any entity's economic resources or obligations at a point in time or the changes therein for a period of time in conformity with a comprehensive basis of accounting."

  B. "A presentation of financial data, including accompanying notes, derived from accounting records and intended to communicate any entity's economic resources or obligations at a point in time or the changes therein for a period of time in conformity with a comprehensive basis of accounting."

  C. "A presentation of financial data, including accompanying notes, derived from accounting records and intended to communicate any entity's financial resources or obligations at a point in time or the changes therein for a period of time in reality with a brief basis of accounting."

  D. "A presentation of financial data, including accompanying notes, derived from accounting records and obligations at a point in time or the changes therein for a period of time in conformity with a comprehensive basis of accounting."

  Correct Answer: B

• Question 175:

  For example, in data collection process for conducting the respective valuation, supporting analysts may be collecting industry, economic, rate or return, and guideline transaction information at the same time that the case manager is working directly with the management of the subject company. In any case, it is important to convey a sufficient overview of the company and of the assignment to all the valuation team members at an early meeting so that all of the analysts will be in a position to recognize important data as they proceed on the project... This example gives the idea that:

  A. The manner and sequence in which the data are gathered are important only to the extent that the process is complete an efficiently carried out

  B. Information gathered should be reviewed and analyzed before the visit to the company so as to focus the interviewing process on the most essential factors that affect the value of the company

  C. The analyst merely inspects voluminous or highly sensitive documents and only gets copies of the information necessary for the performance of the assignment

  D. Data about the subject property's market value is not covered in this approach

  Correct Answer: A

• Question 176:

  The first step in the valuation process, after carefully defining the assignment, is to gather the data necessary to conduct the assignment. These data can be categorized into three groups. Which one of the following is NOT out of those groups?

  A. Company-specific data

  B. Data about the company's industry and economic environment

  C. Data regarding whole supply chain

  D. Data about the subject property's market (market of ownership interests in the subject company)

  Correct Answer: C

• Question 177:

  The market approach, income approach, and asset approach, or a combination of these, are all used to value marital property, but the courts seem to be leery of:

  A. New approaches that have not gained wide acceptance in the valuation community.

  B. New approaches that have gained wide acceptance in the valuation community.

  C. New approaches and old approaches that have not gained wide acceptance in the valuation community.

  D. Evidence of sale of comparable practice'

  Correct Answer: A

• Question 178:

  In case of valuation of family law courts, in fact, courts often mix standards of value with valuation methods. For example, one opinion recognized "fair acceptable methods" for valuing goodwill on the basis of:

  A. The price a willing buyer would pay

  B. Capitalization of excess earnings method

  C. One Quarter's gross average gross income

  D. A and B only

  Correct Answer: D

• Question 179:

  Three levels are identified by ____________ in the hierarchy of measurements to identify fair value, with the highest level available to be used. These levels are; highest-priority level, inputs are those other than quoted prices included within level 1 that are directly or indirectly observable and Level 3 where inputs are unobservable.

  A. FASB

  B. SFAS

  C. IBA

  D. Merger Doctrine

  Correct Answer: A

• Question 180:

  The FASB says that, for "unobservable inputs," the valuation should include market participant assumptions about risk, even if this adjustment is different to determine. Interestingly, it breaks risk into following categories EXCEPT:

  A. The risk inherent in a particular valuation technique

  B. The risk inherent in inputs of the valuation technique

  C. The explicit risk related to a particular valuation technique

  D. The implicit risk related to a particular valuation technique

  Correct Answer: CD