4. Which statement is true? A. A closely held company usually does not require n

Question

4. Which statement is true?

A.            A closely held company usually does not require normalization entries

B.            Requires trend analysis to help determine a capitalization rate OK

C.            Capitalization rates and discounts rates are exactly the same

D.            Valuation uses only the last year’s revenue to determine future revenue

5.            Which statement is false?

A.            It would be useful to ascertain the future economic forecast

B.            You should examine related party transactions more closely than most other transactions

C.            Closely held sister companies are generally more risky in a valuation engagement

D.            All of the above are true

Explanation / Answer

4. following statement is true:

B.            Requires trend analysis to help determine a capitalization rate

=> As research and analysis is essential to determination overall capitalization rates.

5.           following statements is false :

A.            It would be useful to ascertain the future economic forecast (as economic environment changes frequently so ascertaining in difficult)

D.            All of the above are true (because A is false)

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