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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Owners were expected to conclude that retained _______ were better left in the corporation for reinvestment at a higher rate than paid out as dividends.
(a) Shares.
(b) Losses.
(c) Values.
(d) Earnings.

2. Buffett admitted that issuing ________ in mergers cost shareholders money, according to the book.
(a) Announcements.
(b) Bills.
(c) Bonds.
(d) Stock.

3. Buffett was often frustrated with _________, even though it was valuable for business practices.
(a) GLAT.
(b) GAAP.
(c) GAAT.
(d) GLAD.

4. The satire talked about charging off ________ value to negative one million dollars so the company could convert depreciation cost to annual appreciation gain.
(a) Promised.
(b) Variable assets.
(c) Shareholders.
(d) Fixed assets.

5. Munger believed the _________ Berkshire paid to be acceptable for the benefits they received.
(a) Court costs.
(b) Accounting fees.
(c) Treasury funds.
(d) Taxes.

6. In the past, the distinction between economic and accounting goodwill was insignificant when Buffett sought firms with tangible _______, rather than firms relying on economic goodwill.
(a) Shares.
(b) Outlooks.
(c) Management.
(d) Assets.

7. Accounting for the purchase of a business required allocating the ________ first to the fair value of net assets.
(a) Projected price.
(b) Stock market.
(c) Dividends.
(d) Purchase price.

8. Generally, earnings were reported when classified by a company as more than _______ owned.
(a) 99%.
(b) 10%.
(c) 50%.
(d) 25%.

9. Buffett proposed that earnings should be retained to the extent each retained dollar creates at least ________ of market value for owners.
(a) Ten dollars.
(b) Twenty dollars.
(c) Five dollars.
(d) One dollar.

10. Pooling overcame the deficiency of ____________ amortization in a merger, which was really a purchase.
(a) Projected.
(b) Peaceful.
(c) Goodwill.
(d) Promised.

11. Berkshire shareholders can be assured that the company _______ statements are accurate.
(a) Recommended.
(b) Honor.
(c) Holding.
(d) Financial.

12. A company might consider repurchasing _______ when it has available funds that are above long-term needs.
(a) Bills.
(b) Shares.
(c) Bonds.
(d) Fallen angels.

13. What kind of pro told Buffett the piece of information that helped to guide them on the field?
(a) Soccer.
(b) Golf.
(c) Baseball.
(d) Football.

14. Buffett and Munger were often asked to ________ under the assumption it would benefit shareholders, but they disagree.
(a) Buy more holdings.
(b) Split stock.
(c) Keep stock.
(d) Sell stock.

15. Options were often ______ at exercise which made them more expensive than publicly traded options.
(a) Moved.
(b) Undervalued.
(c) Re-priced.
(d) Presented.

Short Answer Questions

1. Inventory was carried at _______ value to minimize any loss from accounting adjustments in addition to other satirical accounting action.

2. _________ was spurious, to Buffett, compared to depreciation charges for deteriorating assets.

3. The partners were committed to providing and presenting a _______ business and ownership philosophy.

4. Buffett preferred to trade a narrow range around _________ business value to favor long-term owners.

5. What is NOT one of the three excuses often given by an overpaying buyer, according to the book?

(see the answer keys)

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