Accounting- MBA questions and
answers
Information included in Annual Report✔✔Management discussion and analysis
(MD&A), notes to the financial statements, and an independent auditor's report
Includes subjective estimates and opinions in annual report✔✔MD&A (Management
discussion and analysis)
What does MD&A provide in annual report✔✔Management's views on company's
ability to pay near-term obligations, its ability to fund operations and expansion, and
its result of operations
Auditor expresses an __________ if satisfied with company's financial statements
and in accordance with GAAP✔✔Unqualified Opinion
Current Assets- examples✔✔Cash, Accounts Receivable, Inventory, Prepaid
expenses
Long Term Assets- examples✔✔Investments, PP&E (Fixed Assets), Intangibles
GAAP✔✔Generally Accepted Accounting Principles
FASB✔✔Financial Accounting Standards Board
GASB✔✔Governmental Accounting Standards Board
Maintaining and improving GAAP is the mission of✔✔FASB and GASB
Internal users✔✔Finance, marketing, human resources, management
External users✔✔investors and creditors
Common stock✔✔Amount paid by stockholders for shares
Purchase of resources a company needs to operate✔✔Investing Activities
Common expenses✔✔Cost of goods sold, selling expenses, marketing expenses,
admin expenses, interest expense, income tax expense
The two primary types of financial statements required are monitored
by✔✔International Financial Reporting Standards (IFRS) and General Accepted
Accounting Principles (GAAP)
Income statements reports revenues and expenses✔✔Over a period of time
, Time period for statement of retained earnings?✔✔Same as time period for income
statement
Net Income from Income statement is used for✔✔Ending balance in retained
earnings
Statement of Retained Earnings formula so to speak✔✔Beginning Retained
Earnings
+Net Income
-Dividends
=Ending Retained Earnings
Ending Retained earnings number used for✔✔Balance Sheet
Balance Sheet reports assets and claims to an asset. When?✔✔At a specific point in
time
Annual Report always has✔✔1) Financial Statements
2) MD&A (MGMT Discussion and Analysis)
3) Notes to Financial Statements
4) Auditor's report- only by CPA
In annual report, what section highlights favorable or unfavorable trends and
identifies events and uncertainties✔✔MD&A
Gross Profit✔✔Revenues - Costs of Goods Sold
Return on Assets =✔✔Operating Profit (Revenue-COGS-SG&A) / Total Assets
Return on Equity =✔✔Net Income / Total Equity
Shareholders Equity =✔✔Assets - Liabilities
Shareholders Equity is comprised of✔✔Common Shares & Retained Earnings
Statement of Retained Earnings reports how✔✔Net Income & Dividends change
Equity
Majority of changes in equity are due to✔✔Generation and distribution of profits
Equity =✔✔Wealth due to owners
Equity formula =✔✔Owners capital + Net Income Retained - Dividends
Contribution by owners is✔✔Part of Equity NOT retained earnings
Calculate Retained Earnings✔✔Beg Retained Earnings
answers
Information included in Annual Report✔✔Management discussion and analysis
(MD&A), notes to the financial statements, and an independent auditor's report
Includes subjective estimates and opinions in annual report✔✔MD&A (Management
discussion and analysis)
What does MD&A provide in annual report✔✔Management's views on company's
ability to pay near-term obligations, its ability to fund operations and expansion, and
its result of operations
Auditor expresses an __________ if satisfied with company's financial statements
and in accordance with GAAP✔✔Unqualified Opinion
Current Assets- examples✔✔Cash, Accounts Receivable, Inventory, Prepaid
expenses
Long Term Assets- examples✔✔Investments, PP&E (Fixed Assets), Intangibles
GAAP✔✔Generally Accepted Accounting Principles
FASB✔✔Financial Accounting Standards Board
GASB✔✔Governmental Accounting Standards Board
Maintaining and improving GAAP is the mission of✔✔FASB and GASB
Internal users✔✔Finance, marketing, human resources, management
External users✔✔investors and creditors
Common stock✔✔Amount paid by stockholders for shares
Purchase of resources a company needs to operate✔✔Investing Activities
Common expenses✔✔Cost of goods sold, selling expenses, marketing expenses,
admin expenses, interest expense, income tax expense
The two primary types of financial statements required are monitored
by✔✔International Financial Reporting Standards (IFRS) and General Accepted
Accounting Principles (GAAP)
Income statements reports revenues and expenses✔✔Over a period of time
, Time period for statement of retained earnings?✔✔Same as time period for income
statement
Net Income from Income statement is used for✔✔Ending balance in retained
earnings
Statement of Retained Earnings formula so to speak✔✔Beginning Retained
Earnings
+Net Income
-Dividends
=Ending Retained Earnings
Ending Retained earnings number used for✔✔Balance Sheet
Balance Sheet reports assets and claims to an asset. When?✔✔At a specific point in
time
Annual Report always has✔✔1) Financial Statements
2) MD&A (MGMT Discussion and Analysis)
3) Notes to Financial Statements
4) Auditor's report- only by CPA
In annual report, what section highlights favorable or unfavorable trends and
identifies events and uncertainties✔✔MD&A
Gross Profit✔✔Revenues - Costs of Goods Sold
Return on Assets =✔✔Operating Profit (Revenue-COGS-SG&A) / Total Assets
Return on Equity =✔✔Net Income / Total Equity
Shareholders Equity =✔✔Assets - Liabilities
Shareholders Equity is comprised of✔✔Common Shares & Retained Earnings
Statement of Retained Earnings reports how✔✔Net Income & Dividends change
Equity
Majority of changes in equity are due to✔✔Generation and distribution of profits
Equity =✔✔Wealth due to owners
Equity formula =✔✔Owners capital + Net Income Retained - Dividends
Contribution by owners is✔✔Part of Equity NOT retained earnings
Calculate Retained Earnings✔✔Beg Retained Earnings
