Test Bank for Financial Accounting for MBAs, 8th Edition, by Peter Easton & John Wild, All Chapters 1-13 LATEST

TestBank ForFinancialAccounting For Mbas 8th Edition By Easton
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, Module1 b




FinancialAccountingforMBAs b b b




LearningObjs–Coveragebyquestion b b b b b




True/False Multiple Choice
b




LO1 – Explain and assess the four main business
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activities.
b




LO2 – Identify and discuss the users and suppliers of
1- 4 1, 2
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financial statement information.
b b

b b b




LO3 –Describe and examine the four financial
5-10 3-19
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statements, and define the accounting equation.
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LO4 – Explain and apply the basics of profitability
11-13 20-25
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analysis.
b




LO5 – Assess business operations within the context of
14 26, 27
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a competitive environment.
b

b b b




LO6 – Access reports filed with the SEC (Appendix 1A).
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LO7 –Describe the accounting principles and
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regulations that frame financial statements (Appendix
b b b b b b 15 28-30
1B).
b




These questions are available to assign in myBusinessCourse.
b b b b b b b




© Cambridge Business Publishers, 2021
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1-1 Financial Accounting for MBAs, 8th Edition
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,Module1: Financial Accounting for MBAs b b b b b




True/False


TOPIC:Users of Financial Statement Information LO: b b b b b




2
1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
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demand information primarily to assess cash flows to repay loan interest and principal.
b b b b b b b b b b b b b




ACCURATE ANSWER:-True b




Reasoning:->>->>>While both shareholders and bankers are interested in all the information companies b b b b b b b b b b b




provide, shareholders care about more about a firm’s profitability and bankers care more about solvency
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and creditworthiness.
b b




TOPIC:Publicly Available Financial Reports b b b




LO: 2
b b




2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
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ACCURATE ANSWER:-False b




Reasoning:->>->>>Companies provide electronic versions of quarterly financial statements to the SEC, b b b b b b b b b b




which posts them to the Internet for the public to access them.
b b b b b b b b b b b b




TOPIC:Users of Financial Statement Information LO: b b b b b




2
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the
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tax authorities (that is, the Internal Revenue Service).
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ACCURATE ANSWER:-False b




Reasoning :->>->>>Demand for information extends to many users; the regulators such as the SEC and
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the IRS are only one class of users.
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TOPIC:SECFilings LO: b b




2
4. Publicly traded companies must provide to the Securities Exchange Commission annual
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audited financial statements (10-K reports) and quarterly audited financial statements (10-Q reports).
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ACCURATE ANSWER:-False b




Reasoning:->>->>>Quarterly reports do not need to be audited. b b b b b b b




TOPIC:Balance
Sheet LO: 3
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5. If a firm reports retained earnings of $175.3 million on its balance sheet, it must also report
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$175.3 million in cash. b b b




ACCURATE ANSWER:-False b




Reasoning:->>->>>The accounting equation requires total assets to equal total liabilities plus b b b b b b b b b b




stockholders’ equity. That does not imply, however, that liability and equity accounts relate directly to
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specific assets.
b b




© Cambridge Business Publishers, 2021
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Test Bank (T/F & MC), Module 1
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, TOPIC:Balance
Sheet LO: 3
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6. A balance sheet shows a firm’s position over a period of time, whereas an income statement,
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statement of stockholders’ equity, and statement of cash flows show its position at a point in time.
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ACCURATE ANSWER:-False b




Reasoning:->>->>>The statement is reversed: A balance sheet shows a firm’s position at a point in time, b b b b b b b b b b b b b b b




whereas an income statement, statement of equity, and statement of cash flows show its position over a
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period of time.
b b b




TOPIC:Accounting
Equation LO: 3
b b b




7. Assets must always equal liabilities plus equity.
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ACCURATE ANSWER:-True b




Reasoning:->>->>>The accounting equation is Assets = Liabilities + Equity. This relation must always hold. b b b b b b b b b b b b b




TOPIC:Income Statement LO: b b




3
8. The income statement reports net income which is defined as the firm’s profit after all expenses and
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dividends have been paid.
b b b b




ACCURATE ANSWER:-False b




Reasoning:->>->>>The statement contains two errors. First, net income does not include any dividends b b b b b b b b b b b b




during the period; these are a distribution of profits and not part of its calculation. Second, the income
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statement is prepared on an accrual basis and thus includes expenses incurred (as opposed to paid).
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TOPIC:Statement of Cash b b




Flows LO: 3
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9. A statement of cash flows reports on cash flows for operating, investing and financing activities at a
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point in time.
b b b




ACCURATE ANSWER:-False b




Reasoning:->>->>>A statement of cash flows reports on cash flows for operating, investing, and b b b b b b b b b b b b




financing activities over a period of time.
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TOPIC:Statement of Stockholders’ Equity b b b




LO: 3
b b




10. An increase in common stock would be reflected in the statement of stockholders’ equity.
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ACCURATE ANSWER:-True b




Reasoning:->>->>>The statement of stockholders’ equity reports on changes in the accounts that make b b b b b b b b b b b b




up stockholders’ equity. This includes contributed capital, retained earnings, and other equity.
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1-3 Financial Accounting for MBAs, 8th Edition b b b b b