1. The book value method of determining value:
a. Subtracts the market value of assets from the market value of liabilities
b. Is the most commonly used valuation approach
c. Subtracts the book value of liabilities from the book value of assets, arriving at net book value
d. Arrives at the fairest fair market value determination

2. Investment value is the value to a specific investor based on his or her respective investment requirements and expectations.
a. True
b. False

3. A going concern premise of value:
a. Assumes that a business will never fail
b. Assumes that a business is making a profit
c. Assumes that a business has free cash flow
d. Assumes that a business will continue to operate into the future

4. A liquidation premise of value:
a. Ensures that a firm’s assets are worth more in ­liquidation than as a going concern
b. Assumes that a business will be terminated and sold
c. Can only be employed if a court directs it
d. Is not a method acceptable under GAAP

5. The date of valuation is not an important consideration in a valuation engagement.
a. True
b. False

6. What are the two types of ownership interest?
a. Individual and goodwill
b. Controlling and investment
c. Minority and controlling
d. None of the above are correctly stated

7. The ability to affect decisions is an important aspect of determining the type of ownership interest to be valued.
a. True
b. False

8. Which of the following sources of information would not be useful to a forensic accountant performing a business valuation?
a. Financial statements, income tax returns, property tax returns
b. Articles of incorporation, corporate minute book
c. Organizational chart, benefits
d. Genogram of the president’s family

9. Once financial data are reviewed and analyzed, a forensic accountant:
a. Files his or her valuation report
b. Discloses the information to interested parties
c. Tours the client’s facilities to gather additional information
d. None of the above are undertaken in a business valuation engagement