Test Bank for Financial & Managerial Accounting for MBAs, 5th Edition (Peter D. Easton) | 2025/2026 Latest Update

TEST BANK for Financial and Managerial
Accounting for MBAs, 5th Edition by Peter
D. Easton
Practice Quiz Solutions| All Modules covered 1-25|
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, Module 1 – Financial Accounting for MBAs
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1. Which of the following organizations does not contribute to the formation of GAAP?
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a. FASB (Financial Accounting Standards Board)
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b. IRS (Internal Revenue Service)
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c. AICPA (American Institute of Certified Public Accountants)
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d. SEC (Securities and Exchange Commission) Correct Answer: b
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2. Rocky Beach reports the following dollar balances in its retained earnings account.
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($ millions)
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Retained earnings… ................... 8,968.1 8,223.9
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During 2017, Rocky Beach reported net income of $1,351.4 million. What amount of dividends, if any,
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did Rocky Beach pay to its shareholders in 2017?
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a. $607.2 million qw




b. No dividends paid
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c. $301.2 million qw




d. $744.2 million Correct Answer: a
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Computation of dividends
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Beginning retained earnings, 2017 ............................................................................
qw qw qw qw $8,223.9

+ Net income .................................................................................................................
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–
Cash dividends....................................................................................................
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....... (?) qw




= Ending retained earnings, 2017 .................................................................................
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$8,968.1



Thus, dividends were $607.2 million for 2017.
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,3. At the beginning of a recent year, The Walt Disney Company’s liabilities equaled $26,197 million.
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During the year, assets increased by $400 million and year-
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end assets equaled $50,388 million. Liabilities decreased $100 million during the year.
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What were beginning and ending amounts for Walt Disney’s equity?
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a. $26,197 million beginning equity and $24,291 million ending equity
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b. $23,791 million beginning equity and $27,042 million ending equity
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c. $23,791 million beginning equity and $24,291 million ending equity
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d. $27,042 million beginning equity and $25,183 million ending equity Correct Answer:
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wc Using the accounting equation at the beginning of the year:
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Assets($50,388 - qw




qw $400) = Liabilities($26,197) + Equity(?) Thus: Beginning
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Equity = $23,791 qw qw




Using the accounting equation at the end of the year:
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Assets($50,388)= Liabilities($26,197 - qw qw




qw $100) + Equity(?) Thus: Ending Equity
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4. Assume that Starbucks reported net income for a recent year of $564 million. Its stockholders’ equity is
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$2,229 million and $2,090 million, respectively.
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Compute its return on equity. qw qw qw qw




a. 13.0%

b. 22.8%

c. 26.1%

d. 32.7%

Correct Answer: c qw qw




ROE = Net income / Average stockholders’ equity
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= $564 million / [($2,229 million + $2,090 million) / 2] = 26.1%
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, 5. Nokia manufactures, markets, and sells phones and other electronics. Assume that Nokia reported net
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income of €3,582 on sales of €34,191 and total stockholders’ equity of €14,576 and €14,871, respective
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ly. What is Nokia’s return on equity?
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a. 24.3%

b. 42.3%

c. 17.7%

d. 10.5%

Correct Answer: a qw qw




Return on equity is net income divided by the average total stockholders’ equity. Nokia’s ROE: €3,582
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/ [(€14,576 + €14,871) / 2] = 24.3%.
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6. The total assets of Dell, Inc. equal $15,470 million and its equity is $4,873 million. What is the amount
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of its liabilities, and what percentage of financing is provided by Dell’s owners?
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a. $20,343 million, 24.0% qw qw




b. $10,597 million, 31.50% qw qw




c. $10,597 million, 68.5% qw qw




d. $20,343 million, 76.0% qw qw




Correct Answer: b ($ millions)
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Dell receives more of its financing from nonowners ($10,597 million) versus owners ($4,873 million).
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Its owner financing comprises 31.5% of its total financing ($4,873 million/ $15,470 million).
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7. The total assets of Ford Motor Company equal $315,920 million and its liabilities equal $304,269
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million. What is the amount of Ford’s equity and what percentage of financing is provided by its owners?
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a. $ 11,651 million, 3.9%
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b. $620,189 million, 49.1% qw qw




c. $620,189 million, 50.9% qw qw




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