The Essays of Warren Buffett: Lessons for Corporate America Test | Final Test - Medium

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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Buffett believed that _______ data was important to his and Munger's decision making.
(a) Accounting.
(b) Business.
(c) Stock.
(d) Investor.

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

3. While Munger and Buffett were excited when they are in the process of acquiring a new business, they were also _________.
(a) Unhurried.
(b) Bored.
(c) Complacent.
(d) Rational.

4. LBO operators benefitted from the use of ________ to reshuffle business, risk little of their own money to gain high fees, etc.
(a) Debt.
(b) Reports.
(c) Meetings.
(d) Downsizing.

5. Berkshire's consolidated statements met outside __________, according to the book.
(a) Values.
(b) Requirements.
(c) Standards.
(d) Movements.

Short Answer Questions

1. 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.

2. The benefits of __________ were retained by Berkshire since it was a strong franchise.

3. If the buyer's stock was sold at less than intrinsic value, he bought with undervalued _________ and would suffer an unequal exchange.

4. What was NOT one of the three tax-free gifting tactics that Buffett suggested to shareholders?

5. Buffett and Munger continue to offer _______ for value trade in the acquisition process, as it seems fair to all parties.

Short Essay Questions

1. What did Buffett say should happen to some earnings in dividends?

2. What was the result of information that is necessary to report to an investor or shareholder?

3. What was done in order to minimize any loss from accounting adjustments during the US Steel transactions?

4. What did Buffett expect to owners of stock to do when he creates a principle that earnings should be retained to the extent each retained dollar creates at least one dollar of market value for owners?

5. What could Berkshire shareholders be assured of, according to Buffett in the book?

6. What did Buffett try to do in order to avoid problems with the two contagious diseases in the investment community?

7. What were the two super contagious diseases that could spread in the investment community?

8. Despite his frustration with the GAAP, what did Buffett come to realize about accounting data?

9. What was the strategy that Buffett employed in order to acquire businesses, after learning the lesson from the golf pro?

10. What happened as the result of the fictional accounting actions by US Steel?

(see the answer keys)

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