, Module1 l
FinancialAccounting for MBAs l ll ll
Learning Objectives – Coverage by question ll ll ll ll ll
True/False Multiple Choice
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LO1 – Explain and assess the four main business
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activities.
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LO2 – Identify and discuss the users and suppliers of
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1- 4 ll 1, 2
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financial statement information.
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LO3 – Describe and examine the four financial
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5-10 3-19
statements, and define the accounting equation.
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LO4 – Explain and apply the basics of profitability
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11-13 20-25
analysis.
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LO5 – Assess business operations within the context of
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14 26, 27
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a competitive environment.
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LO6 – Access reports filed with the SEC (Appendix
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1A).
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LO7 – Describe the accounting principles and
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regulations that frame financial statements (Appendix
ll l l l ll ll 15 28-30
1B).
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These questions are available to assign in myBusinessCourse.
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,Module 1: Financial Accounting for MBAs
ll ll l ll ll
True/False
Topic: Users of Financial Statement Information
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LO: 2
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1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
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l l demand information primarily to assess cash flows to repay loan interest and principal.
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Answer: True l
Rationale: While both shareholders and bankers are interested in all the information companies
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ll provide, shareholders care about more about a company‘s profitability and bankers care more about
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ll solvency and creditworthiness. ll ll
Topic: Publicly Available Financial Reports
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LO: 2
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2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
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Answer: False l
Rationale: Companies provide electronic versions of quarterly financial statements to the SEC, which
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l l posts them to the Internet for the public to access them.
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Topic: Users of Financial Statement Information
ll ll ll ll ll
LO: 2
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3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax authorities
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(that is, the Internal Revenue Service).
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Answer: False l
Rationale: Demand for information extends to many users; the regulators such as the SEC and the IRS
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll are only one class of users.
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Topic: SEC Filings
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LO: 2
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4. Publicly traded companies must provide to the Securities Exchange Commission annual audited financial
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statements (10-K reports) and quarterly audited financial statements (10-Q reports).
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Answer: False l
, Rationale: Quarterly reports do not need to be audited.
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Topic: Balance Sheet
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LO: 3
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5. If a company reports retained earnings of $175.3 million on its balance sheet, it must also report $175.3
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million in cash.
ll ll ll
Answer: False l
FinancialAccounting for MBAs l ll ll
Learning Objectives – Coverage by question ll ll ll ll ll
True/False Multiple Choice
ll
LO1 – Explain and assess the four main business
ll ll ll ll ll ll ll ll
activities.
ll
LO2 – Identify and discuss the users and suppliers of
ll ll ll ll ll ll ll ll ll
1- 4 ll 1, 2
ll
financial statement information.
ll ll ll
LO3 – Describe and examine the four financial
ll ll ll ll ll ll ll
5-10 3-19
statements, and define the accounting equation.
ll l l l ll ll
LO4 – Explain and apply the basics of profitability
ll ll ll ll ll ll ll ll
11-13 20-25
analysis.
ll
LO5 – Assess business operations within the context of
ll l ll ll ll ll ll ll
14 26, 27
ll
a competitive environment.
ll ll ll
LO6 – Access reports filed with the SEC (Appendix
ll ll ll ll ll ll ll ll
1A).
ll
LO7 – Describe the accounting principles and
ll ll ll ll ll ll
regulations that frame financial statements (Appendix
ll l l l ll ll 15 28-30
1B).
ll
These questions are available to assign in myBusinessCourse.
ll ll ll ll ll ll ll
,Module 1: Financial Accounting for MBAs
ll ll l ll ll
True/False
Topic: Users of Financial Statement Information
ll ll ll ll ll
LO: 2
ll ll
1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
l l ll ll ll ll ll ll ll ll ll ll
l l demand information primarily to assess cash flows to repay loan interest and principal.
ll ll ll ll ll ll ll ll ll ll ll ll
Answer: True l
Rationale: While both shareholders and bankers are interested in all the information companies
ll ll ll ll ll ll ll ll ll ll ll ll
ll provide, shareholders care about more about a company‘s profitability and bankers care more about
ll ll ll ll ll ll ll ll ll ll ll ll ll
ll solvency and creditworthiness. ll ll
Topic: Publicly Available Financial Reports
l l l ll
LO: 2
ll ll
2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
ll ll ll ll ll ll l ll ll ll ll l ll
Answer: False l
Rationale: Companies provide electronic versions of quarterly financial statements to the SEC, which
ll ll ll ll ll ll ll ll ll ll ll ll
l l posts them to the Internet for the public to access them.
ll ll ll ll ll ll ll ll ll ll
Topic: Users of Financial Statement Information
ll ll ll ll ll
LO: 2
ll ll
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax authorities
ll ll ll ll ll ll ll ll ll ll ll ll ll ll
(that is, the Internal Revenue Service).
ll ll ll ll ll ll
Answer: False l
Rationale: Demand for information extends to many users; the regulators such as the SEC and the IRS
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
ll are only one class of users.
ll ll ll ll ll
Topic: SEC Filings
l ll
LO: 2
ll ll
4. Publicly traded companies must provide to the Securities Exchange Commission annual audited financial
ll ll ll ll ll ll ll ll ll ll ll ll
statements (10-K reports) and quarterly audited financial statements (10-Q reports).
ll ll ll ll ll ll ll ll ll ll
Answer: False l
, Rationale: Quarterly reports do not need to be audited.
ll ll ll ll ll ll ll ll
Topic: Balance Sheet
l l
LO: 3
ll ll
5. If a company reports retained earnings of $175.3 million on its balance sheet, it must also report $175.3
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
million in cash.
ll ll ll
Answer: False l
