Conservatism means: a)not underestimating asset values, when faced with uncertainty about the value of assets and liabilities. b)using the most optimistic measurement when faced with uncertainty about the value of assets and liabilities. c)not overestimating liabilities, when faced with the uncertainty about the value of assets and liabilities. d)using the least optimistic measurement when faced with uncertainty about the value of assets and liabilities.

Financial analysis does not include assessing future performance and risk because financial statements are based on past performance. True or False True False

Which of the following statements describing the elements of intrinsic valuation is most accurate? A.) When the present value of the cashflows is discounted with the appropriate rate and this present value is positive, then the asset providing these cashflows has a value to the investor. B.) The risk-free rate is the lowest rate that an investor can earn from short-term investments. C.) Cashflows may include depreciation expenses and amortization costs. D.) A simple calculation of present values of expected cashflows of different investments using the risk free rate would be enough to determine which asset is best.

Seve &Exit According to the principle of conservatism, when faced with uncertainty about the value of an item, a company should use the Help measure that avoids Multiple Choice overstating assets and understating liabilities. overstating essets and liabilities. O understating assets and liabilities. understating essets and overstating liabilities.