NACVA Exam Practice Test Instant Access - No Installation Required

Question 1

The work-in-process inventory of a professional service firm is essentially the unbilled receivables of the firm. Therefore, the same net realizable value rules discussed with respect to accounts and notes receivable would apply to this asset as well. With regard to tangible merchandise inventory, there are some common valuation methods such as:

AThe cost of reproduction method

BThe income expenditure method

CThe comparative sales method

DA and C

Answer : D

Question 2

All of the various tangible personal property valuation method and procedures can be grouped into the following approaches EXCEPT:

AThe work-in-process inventory of a professional services firm

BThe merchandise inventory of a manufacturer/processor or of a wholesale/retail company

CFinal valuation reconciliation

DFinancial asset account categories

Answer : C, D

Question 3

Which of he following factors is NOT considered, among others, when determining if quantitative adjustments to the sales comparison data are necessary?

AAge of each transaction

BLand-to-building ratio of each property

CAbsolute location and relative location of each property in relation to population centers, highways, and so forth

DSafety aspects of each property

Answer : D

Question 4

The sales comparison approach is based on the economic principles of:

AEfficient markets

BSpecial financing and other terms regarding each sales transactions

CAge of each property

DSupply and demand

Answer : A, D

Question 5

The normalized economic income is capitalized, typically, as an annuity in perpetuity. The capitalization rate used in this procedure should be:

ACommensurate with the risk of investment

BConsistent with the measurement of net income

CDebt component and equity component are blended

Dderived from the property over a discrete period of time

Answer : A

Question 6

Estate taxes become a problem only to the extent that:

AThe estate's value exceeds the amount exempted from estate taxes

BThe estate's value does not exceed the amount exempted from estate taxes

CEstate's value exceeds the amount separated from funding

DEstate's value becomes equal to the amount separated from funding

Answer : A

Question 7

In general, the use of life insurance can fulfill all of the following basic needs EXCEPT:

ALiquidation of the stock of a disabled stockholder, either by the corporation or by other stockholder

BPayment of estate taxes

CMinimum interest rate based on U.S. Treasury rates

DProvision for continuity of the business after loss of a key person

Answer : C

NACVA Certified Valuation Analysts Exam Practice Test