SASB FSA LEVEL 1 EXAM QUESTIONS
WITH CORRECT ANSWERS
Brundtland Report - Correct Answers -Published in 1987 in the influential report "Our
Common Future" and created by World Commision on Environment and Development
of the UN. Discusses sustainable development and the triple bottom line for the first
time.
European Commission's Action Plan for Financial Sustainable Growth - Correct
Answers -3 core strategies:
-reorienting capital flows towards a more sustainable economy
-mainstreaming sustainability into risk management
-fostering transparency and long-termism
Stock Market Crash of 1929 - Correct Answers -historical example about how a lack of
transparency and public reporting can have disastrous consequences
comparative analysis - Correct Answers -seeks to compare industry peers against one
another
company/security valution - Correct Answers -aims to determine appropriate value of a
company using various inputs and models
upside potential - Correct Answers -the possibility to, with the proper investment and
management, yield significant increases in value
downside risk - Correct Answers -the possibility that an investor will lose his money in
an investment
- fixed income investors focus on this rather than upside potential
index fund - Correct Answers -a mutual fund or exchange-traded fund constructed to
match the performance components of a market index, such as the S&P Global 1200 or
Euro Stoxx 50
US SEC/Securities and Exchange Commission - Correct Answers -Protects investors,
maintains fair, orderly, and efficient markets, and facilitates capital formation
, materiality (as defined by the US Supreme Court) - Correct Answers -information is
material if its exclusion would have altered the "total mix" of information considered by a
reasonable investor
GAAP - Correct Answers -Generally Accepted Accounting Principles
historical cost accounting - Correct Answers -measured the value of an asset as the
actual cost paid at the time of purchase
-original nominal value of asset reported on balance sheet, even if the asset's value has
changed over time
Accounting Principles Board (APB) - Correct Answers -replaced CAP to resolve
tensions, reduce variation in accounting practices, and establish one standardized
practice
A statement of basic accounting theory - Correct Answers -1960s report that shifted
focus of financial reporting from strict historical asset valuation and toward decision
usefulness of reported information to the users of the disclosed information
-"provide information which will be of assistance in making economic decisions"
FASB (Financial Accounting Standards Board) - Correct Answers -Founded to replace
APB; identified goal of disclosure and accounting; affirmed decision-usefulness and
emphasis on discounted future cash flows as way of valuing assets (as opposed to
historical cost accounting)
-also stated that economic and social goals of a business are equally important
EBITDA - Correct Answers -Earnings before interest, taxes, depreciation, and
amortization
83% - Correct Answers -how much tangible assets composed of market value of S&P
500 in 1975
10% - Correct Answers -how much tangible assets composed of market value of S&P
500 in 2020
IFRS Management Commentary - Correct Answers --Provide management's view of the
entity's performance, position, and progress
-supplement and complement information presented in financial statements
IASB 2017 guidance - Correct Answers -"matters that could affect an entity's long-term
prospects; the entity's intangible resources and relationships; and ESG matters"
KPI - Correct Answers -Key Performance Indicator
US SEC on Management Disclosure and Analysis (MD&A) - Correct Answers --focus on
material information
WITH CORRECT ANSWERS
Brundtland Report - Correct Answers -Published in 1987 in the influential report "Our
Common Future" and created by World Commision on Environment and Development
of the UN. Discusses sustainable development and the triple bottom line for the first
time.
European Commission's Action Plan for Financial Sustainable Growth - Correct
Answers -3 core strategies:
-reorienting capital flows towards a more sustainable economy
-mainstreaming sustainability into risk management
-fostering transparency and long-termism
Stock Market Crash of 1929 - Correct Answers -historical example about how a lack of
transparency and public reporting can have disastrous consequences
comparative analysis - Correct Answers -seeks to compare industry peers against one
another
company/security valution - Correct Answers -aims to determine appropriate value of a
company using various inputs and models
upside potential - Correct Answers -the possibility to, with the proper investment and
management, yield significant increases in value
downside risk - Correct Answers -the possibility that an investor will lose his money in
an investment
- fixed income investors focus on this rather than upside potential
index fund - Correct Answers -a mutual fund or exchange-traded fund constructed to
match the performance components of a market index, such as the S&P Global 1200 or
Euro Stoxx 50
US SEC/Securities and Exchange Commission - Correct Answers -Protects investors,
maintains fair, orderly, and efficient markets, and facilitates capital formation
, materiality (as defined by the US Supreme Court) - Correct Answers -information is
material if its exclusion would have altered the "total mix" of information considered by a
reasonable investor
GAAP - Correct Answers -Generally Accepted Accounting Principles
historical cost accounting - Correct Answers -measured the value of an asset as the
actual cost paid at the time of purchase
-original nominal value of asset reported on balance sheet, even if the asset's value has
changed over time
Accounting Principles Board (APB) - Correct Answers -replaced CAP to resolve
tensions, reduce variation in accounting practices, and establish one standardized
practice
A statement of basic accounting theory - Correct Answers -1960s report that shifted
focus of financial reporting from strict historical asset valuation and toward decision
usefulness of reported information to the users of the disclosed information
-"provide information which will be of assistance in making economic decisions"
FASB (Financial Accounting Standards Board) - Correct Answers -Founded to replace
APB; identified goal of disclosure and accounting; affirmed decision-usefulness and
emphasis on discounted future cash flows as way of valuing assets (as opposed to
historical cost accounting)
-also stated that economic and social goals of a business are equally important
EBITDA - Correct Answers -Earnings before interest, taxes, depreciation, and
amortization
83% - Correct Answers -how much tangible assets composed of market value of S&P
500 in 1975
10% - Correct Answers -how much tangible assets composed of market value of S&P
500 in 2020
IFRS Management Commentary - Correct Answers --Provide management's view of the
entity's performance, position, and progress
-supplement and complement information presented in financial statements
IASB 2017 guidance - Correct Answers -"matters that could affect an entity's long-term
prospects; the entity's intangible resources and relationships; and ESG matters"
KPI - Correct Answers -Key Performance Indicator
US SEC on Management Disclosure and Analysis (MD&A) - Correct Answers --focus on
material information
