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Balance sheet, market approach and earnings approach

Quiz by Sarah Ayyad

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10 questions
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  • Q1
    What does the market approach in valuing a business focus on?
    The future growth potential
    The current assets and liabilities
    Comparing it to similar businesses in the market
    The company's past earnings
    30s
  • Q2
    Which approach focuses on a company's earnings to determine its value?
    Asset approach
    Market approach
    Balance sheet approach
    Earnings approach
    30s
  • Q3
    In a balance sheet, what does the term 'liabilities' refer to?
    The total cash on hand
    The total sales revenue
    The ownership equity of shareholders
    The debts and obligations a company owes
    30s
  • Q4
    What is the primary purpose of a balance sheet?
    To calculate the company's profit for the year
    To summarize daily sales
    To list the company's employees
    To show a company's financial position at a specific point in time
    30s
  • Q5
    What key component does the market approach rely on for business valuation?
    Future earnings predictions
    Employee satisfaction surveys
    Detailed financial statements
    Comparative sales data from similar businesses
    30s
  • Q6
    Which of the following is NOT typically found on a balance sheet?
    Liabilities
    Income from sales
    Equity
    Assets
    30s
  • Q7
    What does the earnings approach primarily consider when valuing a business?
    Assets on the balance sheet
    Costs of production
    Current market trends
    Future cash flows and profits
    30s
  • Q8
    Which financial statement shows a company's assets, liabilities, and equity?
    Income statement
    Balance sheet
    Cash flow statement
    Statement of changes in equity
    30s
  • Q9
    Which approach would you use to value a business based on its recent sales transactions in the market?
    Market approach
    Cost approach
    Earnings approach
    Balance sheet approach
    30s
  • Q10
    What does equity represent on a balance sheet?
    The owners' claim on the assets of the company
    The cash flow from operations
    The company's total sales
    The debts owed to creditors
    30s

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