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

Multiple Choice Questions

1. What was NOT one of the three tax-free gifting tactics that Buffett suggested to shareholders?
(a) Bargain sale.
(b) Married couple gifting.
(c) Partnership form.
(d) Will gifting.

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

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

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

5. The benefits of __________ were retained by Berkshire since it was a strong franchise.
(a) Tax reduction.
(b) Shareholder meetings.
(c) Reporting.
(d) Fair market value.

6. ________ took fictional accounting actions that showed absurd accounting manipulations to let it undersell all competition to dominate the industry.
(a) US Steel.
(b) GEICO.
(c) Pepsi.
(d) Coca-Cola.

7. Buffett started to buy _____ businesses at good prices instead of buying good businesses at fair prices.
(a) Good.
(b) True.
(c) Fair.
(d) Valuable.

8. Whose approach did other companies try to use in order to emulate Berkshire?
(a) Mulder.
(b) Graham.
(c) Munder.
(d) Smith.

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

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

11. During what year were the Berkshire shares to be traded on the New York Stock Exchange?
(a) 1975.
(b) 1988.
(c) 1986.
(d) 1999.

12. Some CEOs think that manipulating __________ could encourage the highest stock price available.
(a) Mergers.
(b) Reports.
(c) Earnings.
(d) Portfolios.

13. Inventory was carried at _______ value to minimize any loss from accounting adjustments in addition to other satirical accounting action.
(a) $1.
(b) $99.
(c) $20.
(d) $10.

14. A stock _______ might attractive investors unlike their current investor group which might downgrade the quality of the shares.
(a) Selloff.
(b) Sale.
(c) Split.
(d) Option.

15. What is NOT one of the features that Buffett and Munger looked for in acquisition opportunities?
(a) Consistent earnings power.
(b) Simple business.
(c) Good reputation.
(d) Management in place.

Short Answer Questions

1. Buffett and Munger promise to never ________ unless they are selling at a market price well below intrinsic business value.

2. Berkshire kept the business operating after the acquisition, since it would already have successful ___________.

3. While Munger and Buffett were excited when they are in the process of acquiring a new business, they were also _________.

4. The question of an exchange of stock arose in 1983 during the merger of Berkshire and ____________.

5. Buffett and Munger did not operate a strategic plan for __________ but compare opportunities against passive investments.

(see the answer keys)

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