TEST BANK FOR Financial & Managerial Accounting for MBAs, 6th Edition by Easton, ||GRADE A+

Cambridge Business Publishers, ©2018
Practice Quiz Solutions, Module 1 1-1

,Cambridge Business Publishers, ©2018
1-2 Financial & Managerial Accounting for MBAs, 5th Edition

, Financial & Managerial Accounting For Mbas, 6th Edition
By Easton, Halsey, Mcanally, Hartgraves & Morse

Practice Quiz Solutions


Module 1 – Financial Accounting For Mbas

1. Which Of The Following Organizations Does Not Contribute To The Formation Of GAAP?

a. FASB (Financial Accounting Standards Board)
b. IRS (Internal Revenue Service)
c. AICPA (American Institute Of Certified Public Accountants)
d. SEC (Securities And Exchange Commission)

SOLUTION:B


2. Rocky Beach Reports The Following Dollar Balances In Its Retained Earnings Account.

($ Millions) 2017 2016
Retained Earnings…………. 8,968.1 8,223.9

During 2017, Rocky Beach Reported Net Income Of $1,351.4 Million. What Amount Of Dividends, If
Any, Did Rocky Beach Pay To Its Shareholders In 2017?

a. $607.2 Million
b. No Dividends Paid
c. $301.2 Million
d. $744.2 Million

SOLUTION:A

Computation Of Dividends
Beginning Retained Earnings, 2017 ............................................................................ $8,223.9
+ Net Income ................................................................................................................. 1,351.4
– Cash Dividends........................................................................................................... (?)
= Ending Retained Earnings, 2017 ................................................................................. $8,968.1

Thus, Dividends Were $607.2 Million For 2017.




Cambridge Business Publishers, ©2018
Practice Quiz Solutions, Module 1 1-3

, 3. At The Beginning Of A Recent Year, The Walt Disney Company’s Liabilities Equaled $26,197
Million. During The Year, Assets Increased By $400 Million And Year-End Assets Equaled
$50,388 Million. Liabilities Decreased $100 Million During The Year.

What Were Beginning And Ending Amounts For Walt Disney’s Equity?

a. $26,197 Million Beginning Equity And $24,291 Million Ending Equity
b. $23,791 Million Beginning Equity And $27,042 Million Ending Equity
c. $23,791 Million Beginning Equity And $24,291 Million Ending Equity
d. $27,042 Million Beginning Equity And $25,183 Million Ending

Equity SOLUTION:C

Using The Accounting Equation At The Beginning Of The Year:

Assets($50,388 - $400) = Liabilities($26,197) + Equity(?)
Thus: Beginning Equity = $23,791

Using The Accounting Equation At The End Of The Year:
Assets($50,388) = Liabilities($26,197 - $100) + Equity(?)
Thus: Ending Equity = $24,291


4. Assume That Starbucks Reported Net Income For A Recent Year Of $564 Million. Its
Stockholders’ Equity Is $2,229 Million And $2,090 Million, Respectively.

Compute Its Return On Equity.

a. 13.0%
b. 22.8%
c. 26.1%
d. 32.7%

SOLUTION:C

ROE = Net Income / Average Stockholders’ Equity
= $564 Million / [($2,229 Million + $2,090 Million) / 2] = 26.1%


5. Nokia Manufactures, Markets, And Sells Phones And Other Electronics. Assume That Nokia
Reported Net Income Of €3,582 On Sales Of €34,191 And Total Stockholders’ Equity Of €14,576
And €14,871, Respectively.

What Is Nokia’s Return On Equity?

a. 24.3%
b. 42.3%
c. 17.7%
d. 10.5%

SOLUTION:A

Return On Equity Is Net Income Divided By The Average Total Stockholders’ Equity.
Nokia’s ROE: €3,582 / [(€14,576 + €14,871) / 2] = 24.3%.




Cambridge Business Publishers, ©2018
1-4 Financial & Managerial Accounting for MBAs, 5th Edition