TEST BANK
Financial Accounting for MBAs
Peter D. Easton
8th Edition
JN
U
R
SE
,Table of Contents
1. Introducing Financial Statements and Transaction Analysis
2. Accounting Adjustments and Constructing Financial Statements
3. Analyzing and Interpreting Financial Statements
4. Reporting and Analyzing Operating Income
5. Reporting and Analyzing Operating Assets
6. Reporting and Analyzing Inter-corporate Investments
7. Reporting and Analyzing Non-owner Financing
8. Reporting and Analyzing Owner Financing
9. Reporting and Analyzing Off-Balance-Sheet Financing
10.Forecasting Financial Statements
11.Analyzing and Valuing Equity Securities
Appendices:
• Appendix A: Compound Interest Tables
JN
• Appendix B: Constructing the Statement of Cash Flows
• Appendix C: Chart of Accounts and Acronyms
• Appendix D: Expanded Coverage of International Financial Reporting Standards
U
R
SE
, Module 1
Financial Accounting for MBAs
Learning Objectives – Coverage by question
True/False Multiple Choice
LO1 – Explain and assess the four main business
activities.
LO2 – Identify and discuss the users and suppliers of
JN
1- 4 1, 2
financial statement information.
LO3 – Describe and examine the four financial
5-10 3-19
statements, and define the accounting equation.
U
LO4 – Explain and apply the basics of profitability
11-13 20-25
R
analysis.
SE
LO5 – Assess business operations within the context
14 26, 27
of a competitive environment.
LO6 – Access reports filed with the SEC (Appendix
1A).
LO7 – Describe the accounting principles and
regulations that frame financial statements (Appendix 15 28-30
1B).
These questions are available to assign in myBusinessCourse.
, Module 1: Financial Accounting for MBAs
True/False
Topic: Users of Financial Statement Information
LO: 2
1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
demand information primarily to assess cash flows to repay loan interest and principal.
Answer: True
Rationale: While both shareholders and bankers are interested in all the information companies
provide, shareholders care about more about a company’s profitability and bankers care more about
solvency and creditworthiness.
Topic: Publicly Available Financial Reports
LO: 2
2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
Answer: False
JN
Rationale: Companies provide electronic versions of quarterly financial statements to the SEC, which
posts them to the Internet for the public to access them.
Topic: Users of Financial Statement Information
U
LO: 2
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax authorities
(that is, the Internal Revenue Service).
R
Answer: False
Rationale: Demand for information extends to many users; the regulators such as the SEC and the IRS
are only one class of users.
SE
Topic: SEC Filings
LO: 2
4. Publicly traded companies must provide to the Securities Exchange Commission annual audited financial
statements (10-K reports) and quarterly audited financial statements (10-Q reports).
Answer: False
Rationale: Quarterly reports do not need to be audited.
Topic: Balance Sheet
LO: 3
5. If a company reports retained earnings of $175.3 million on its balance sheet, it must also report $175.3
million in cash.
Answer: False
Financial Accounting for MBAs
Peter D. Easton
8th Edition
JN
U
R
SE
,Table of Contents
1. Introducing Financial Statements and Transaction Analysis
2. Accounting Adjustments and Constructing Financial Statements
3. Analyzing and Interpreting Financial Statements
4. Reporting and Analyzing Operating Income
5. Reporting and Analyzing Operating Assets
6. Reporting and Analyzing Inter-corporate Investments
7. Reporting and Analyzing Non-owner Financing
8. Reporting and Analyzing Owner Financing
9. Reporting and Analyzing Off-Balance-Sheet Financing
10.Forecasting Financial Statements
11.Analyzing and Valuing Equity Securities
Appendices:
• Appendix A: Compound Interest Tables
JN
• Appendix B: Constructing the Statement of Cash Flows
• Appendix C: Chart of Accounts and Acronyms
• Appendix D: Expanded Coverage of International Financial Reporting Standards
U
R
SE
, Module 1
Financial Accounting for MBAs
Learning Objectives – Coverage by question
True/False Multiple Choice
LO1 – Explain and assess the four main business
activities.
LO2 – Identify and discuss the users and suppliers of
JN
1- 4 1, 2
financial statement information.
LO3 – Describe and examine the four financial
5-10 3-19
statements, and define the accounting equation.
U
LO4 – Explain and apply the basics of profitability
11-13 20-25
R
analysis.
SE
LO5 – Assess business operations within the context
14 26, 27
of a competitive environment.
LO6 – Access reports filed with the SEC (Appendix
1A).
LO7 – Describe the accounting principles and
regulations that frame financial statements (Appendix 15 28-30
1B).
These questions are available to assign in myBusinessCourse.
, Module 1: Financial Accounting for MBAs
True/False
Topic: Users of Financial Statement Information
LO: 2
1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
demand information primarily to assess cash flows to repay loan interest and principal.
Answer: True
Rationale: While both shareholders and bankers are interested in all the information companies
provide, shareholders care about more about a company’s profitability and bankers care more about
solvency and creditworthiness.
Topic: Publicly Available Financial Reports
LO: 2
2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
Answer: False
JN
Rationale: Companies provide electronic versions of quarterly financial statements to the SEC, which
posts them to the Internet for the public to access them.
Topic: Users of Financial Statement Information
U
LO: 2
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax authorities
(that is, the Internal Revenue Service).
R
Answer: False
Rationale: Demand for information extends to many users; the regulators such as the SEC and the IRS
are only one class of users.
SE
Topic: SEC Filings
LO: 2
4. Publicly traded companies must provide to the Securities Exchange Commission annual audited financial
statements (10-K reports) and quarterly audited financial statements (10-Q reports).
Answer: False
Rationale: Quarterly reports do not need to be audited.
Topic: Balance Sheet
LO: 3
5. If a company reports retained earnings of $175.3 million on its balance sheet, it must also report $175.3
million in cash.
Answer: False
