,DOWNLOAD THE Test Bank for Financial & Managerial Accounting for Decis
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Chapter 1 m
Introducing Financial Accounting m m
Learning Objectives – Coverage by Question
m m m m m
Multiple Essay
True/False Choice Exercises Problems Questions
LO1mIdentif y mthemusers mof ma
ccounting minf ormationmand mdi
1,m2 1-3 1, m2 2, m5,m6
scuss mthemcosts mand mbenef it
s mof mdisclosure.
LO2mDescribemamcompany's m
business mactivities mand mexpl
ainmhowmthesemactivities marem 3-6 4,m5 3 1, m6
represented mby mthemaccounti
ng mequation.
LO3mIntroducemthemf ourmkey m
f inancialmstatements mincludin
g mthembalancemsheet, mincome
7-9 4,m6-11 4-11 1-5
mstatement, mstatement mof msto
ckholders' mequity, mand mstate
ment mof mcashmf lows.
LO4mDescribemtheminstitution
s mthat mregulatemf inancialmacc
ounting mand mtheirmroleminmest
10-12 12, m19, m20 3, m4
ablishing mgenerally maccepted
maccounting mprinciples.
LO5mComputemtwo mkey mratio
s mthat maremcommonly mused mt
o massess mprofitability mand mris 13,14 13-18 13, m14
k m-
mreturnmonmequity mand mthemde
bt-mto-equity mratio.
LO6mAppendix m1A: m Explainm
themconceptualmf ramework mf o 15,m16 21,m22 12 3, m5
rmf inancialmreporting.
©CambridgemBusinessmPublishers,m2018
Test mBank,mChapterm1 1-1
mynursytest.store
,DOWNLOAD THE Test Bank for Financial & Managerial Accounting for Decis
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Chapter 1: Introducing Financial Accounting
m m m m
True/False
Topic:mCostmandmbenefits mof mdisclosurem
LO:m1
1. Onemreasonmcompanies maremmotivated mto mdisclosemfinancialminformationmto mexternalmdecisionmmaker
s mis mthat mitmmay mlowermf inancing mand moperating mcosts.
Answer: mTrue
Rationale: mFormexample, mwhenmamcompany mapplies mformamloan, mthembank muses mthemcompany’s mfinanc
ialmstatements mto mhelp mdeterminemthemappropriateminterest mrate. mWithout mthis mf inancialminf ormation, ma
mcompany mmay mhavemamhighermcost mof mborrowing mormnot mobtainmthemloanmat mall.
Topic:mDemandmformaccountingminformationm
LO:m1
2. Financialmaccounting mis mdesigned mprimarily mf ormdecisionmmakers mwithinmthemcompany.
Answer: mFalse
Rationale: mFinancialmaccounting mis mdesigned mprimarily mto mprovideminf ormationmtomdecisionmmakers mou
tsidemof mthemcompany, mwhilemmanagerialmaccounting mis mdesigned mprimarily mformdecisionmmakers mwithi
nmthemcompany.
Topic:mInvestingmactivitiesm
LO:m2
3. Investing m activities m arem them acquiring m and m disposing m ofm liabilities m that m am company m needs m inm ord
erm to mf inancemits moperating mactivities.
Answer: mFalse
Rationale: mInvesting mactivities maremthemacquiring mand mdisposingmof massets mthat mamcompany mneeds mformthe
mproductionmand msalemof mamcompany’s mproducts mand mservices.
Topic:mAccountingmequation
mLO:m2
4. Assets mmust malways mequalmliabilities mplus mstockholders’mequity.
Answer: mTrue
Rationale: mThemaccounting mequationmis mAssets m= mLiabilities m+ mStockholders’mEquity. mThis mrelationmmust ma
lways mstay minmbalance.
Topic:mFinancingmactivitiesm
LO:m2
5. Othermthanmoperating mprof it, mtheremaremthreemmainmsources mof mexternalmf inancing.
Answer: mFalse
Rationale: mTheremaremtwo mmainmsources mof mf inancing: mownerm(also mcalled mshareholdermormequity)mf in
ancing mand mnonownerm(also mcalled mcreditormormlender)mf inancing.
©CambridgemBusinessmPublishers,m2018
1-2 Financialm&mManagerialmAccounting mformDecision mMakers,m3rdmEdition
mynursytest.store
, DOWNLOAD THE Test Bank for Financial & Managerial Accounting for Decis
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Topic:mFinancingmandminvestingmactivitie
smLO:m2
6. Financingmactivitiesmaremdefinedmasmthemacquiringmandmdisposingmof mresourcesmformthempurp
osemof msellingmproductsmandmservices.
Answer: mFalse
Rationale: mFinancing mactivities maremdef ined mas mmethodsmamcompany muses mtomraisemfunds mtompay mform
resources. m Investing mactivities maremdef ined mas mthemacquiring mand mdisposing mof mresources mformthempu
rposemof mselling mproducts mand mservices.
Topic:mStatementmofmcash mflowsm
LO:m3
7. Amstatement mof mcashmflows mreportsmonmcashmflows mformoperating, minvesting mand mfinancing mactivities ma
t mampoint minmtime.
Answer: mFalse
Rationale: mAmstatement mof mcashmflows mreports monmcashmflows mformoperating, minvesting,mand mfinancingm
activities movermamperiod mof mtime.
Topic:mRetainedmearningsmL
O:m3
8. Retained m earnings m arem present m onm bothm them incomem statement m and m them statement m of m stockhold
ers’mequity.
Answer: mFalse
Rationale: mRetained mearnings marempresent minmthemstatement mof mstockholders’mequity mand mthembalanc
emsheet. mThemincomemstatement mrepresents mcurrent mperiod mearnings.
Topic:mBalancemsheetmL
O:m3
9. If mamcompany mreportsmretainedmearningsmof m$242.6mmillionmonmitsmbalancemsheet,mitmwillma
lsomreportm$242.6mmillionminmcash.
Answer: mFalse
Rationale: mThemaccounting mequationmrequires mtotalmassets mto mequalmtotalmliabilities mplus mstockholders’
mequity. m That mdoes mnot mimply, mhowever, mthat mliability mand mequity maccounts mrelatemdirectly mtomspecific
massets.
Topic:mRegulationmandmOversight
mLO:m4
10. Them goalm of m them Sarbanes-
Oxley m Act m ofm 2002m was m to m increasem them levelm of m conf idencem that m externalmusers mhaveminmthemf ina
ncialmstatements.
Answer: mTrue
Rationale: mInmthemwakemof mscandals, mlikemthosemthat mtookmdownmEnron, mthemU.S. mCongress mpasse
d mthemSarbanes-Oxley mAct mto mimprovemexternalmusermconf idenceminmf inancialmstatement mreporting.
©CambridgemBusinessmPublishers,m2018
mynursytest.store
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Chapter 1 m
Introducing Financial Accounting m m
Learning Objectives – Coverage by Question
m m m m m
Multiple Essay
True/False Choice Exercises Problems Questions
LO1mIdentif y mthemusers mof ma
ccounting minf ormationmand mdi
1,m2 1-3 1, m2 2, m5,m6
scuss mthemcosts mand mbenef it
s mof mdisclosure.
LO2mDescribemamcompany's m
business mactivities mand mexpl
ainmhowmthesemactivities marem 3-6 4,m5 3 1, m6
represented mby mthemaccounti
ng mequation.
LO3mIntroducemthemf ourmkey m
f inancialmstatements mincludin
g mthembalancemsheet, mincome
7-9 4,m6-11 4-11 1-5
mstatement, mstatement mof msto
ckholders' mequity, mand mstate
ment mof mcashmf lows.
LO4mDescribemtheminstitution
s mthat mregulatemf inancialmacc
ounting mand mtheirmroleminmest
10-12 12, m19, m20 3, m4
ablishing mgenerally maccepted
maccounting mprinciples.
LO5mComputemtwo mkey mratio
s mthat maremcommonly mused mt
o massess mprofitability mand mris 13,14 13-18 13, m14
k m-
mreturnmonmequity mand mthemde
bt-mto-equity mratio.
LO6mAppendix m1A: m Explainm
themconceptualmf ramework mf o 15,m16 21,m22 12 3, m5
rmf inancialmreporting.
©CambridgemBusinessmPublishers,m2018
Test mBank,mChapterm1 1-1
mynursytest.store
,DOWNLOAD THE Test Bank for Financial & Managerial Accounting for Decis
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Chapter 1: Introducing Financial Accounting
m m m m
True/False
Topic:mCostmandmbenefits mof mdisclosurem
LO:m1
1. Onemreasonmcompanies maremmotivated mto mdisclosemfinancialminformationmto mexternalmdecisionmmaker
s mis mthat mitmmay mlowermf inancing mand moperating mcosts.
Answer: mTrue
Rationale: mFormexample, mwhenmamcompany mapplies mformamloan, mthembank muses mthemcompany’s mfinanc
ialmstatements mto mhelp mdeterminemthemappropriateminterest mrate. mWithout mthis mf inancialminf ormation, ma
mcompany mmay mhavemamhighermcost mof mborrowing mormnot mobtainmthemloanmat mall.
Topic:mDemandmformaccountingminformationm
LO:m1
2. Financialmaccounting mis mdesigned mprimarily mf ormdecisionmmakers mwithinmthemcompany.
Answer: mFalse
Rationale: mFinancialmaccounting mis mdesigned mprimarily mto mprovideminf ormationmtomdecisionmmakers mou
tsidemof mthemcompany, mwhilemmanagerialmaccounting mis mdesigned mprimarily mformdecisionmmakers mwithi
nmthemcompany.
Topic:mInvestingmactivitiesm
LO:m2
3. Investing m activities m arem them acquiring m and m disposing m ofm liabilities m that m am company m needs m inm ord
erm to mf inancemits moperating mactivities.
Answer: mFalse
Rationale: mInvesting mactivities maremthemacquiring mand mdisposingmof massets mthat mamcompany mneeds mformthe
mproductionmand msalemof mamcompany’s mproducts mand mservices.
Topic:mAccountingmequation
mLO:m2
4. Assets mmust malways mequalmliabilities mplus mstockholders’mequity.
Answer: mTrue
Rationale: mThemaccounting mequationmis mAssets m= mLiabilities m+ mStockholders’mEquity. mThis mrelationmmust ma
lways mstay minmbalance.
Topic:mFinancingmactivitiesm
LO:m2
5. Othermthanmoperating mprof it, mtheremaremthreemmainmsources mof mexternalmf inancing.
Answer: mFalse
Rationale: mTheremaremtwo mmainmsources mof mf inancing: mownerm(also mcalled mshareholdermormequity)mf in
ancing mand mnonownerm(also mcalled mcreditormormlender)mf inancing.
©CambridgemBusinessmPublishers,m2018
1-2 Financialm&mManagerialmAccounting mformDecision mMakers,m3rdmEdition
mynursytest.store
, DOWNLOAD THE Test Bank for Financial & Managerial Accounting for Decis
m m m m m m m m m m
ion Makers 3rd Edition Dyckman
m m m m
Topic:mFinancingmandminvestingmactivitie
smLO:m2
6. Financingmactivitiesmaremdefinedmasmthemacquiringmandmdisposingmof mresourcesmformthempurp
osemof msellingmproductsmandmservices.
Answer: mFalse
Rationale: mFinancing mactivities maremdef ined mas mmethodsmamcompany muses mtomraisemfunds mtompay mform
resources. m Investing mactivities maremdef ined mas mthemacquiring mand mdisposing mof mresources mformthempu
rposemof mselling mproducts mand mservices.
Topic:mStatementmofmcash mflowsm
LO:m3
7. Amstatement mof mcashmflows mreportsmonmcashmflows mformoperating, minvesting mand mfinancing mactivities ma
t mampoint minmtime.
Answer: mFalse
Rationale: mAmstatement mof mcashmflows mreports monmcashmflows mformoperating, minvesting,mand mfinancingm
activities movermamperiod mof mtime.
Topic:mRetainedmearningsmL
O:m3
8. Retained m earnings m arem present m onm bothm them incomem statement m and m them statement m of m stockhold
ers’mequity.
Answer: mFalse
Rationale: mRetained mearnings marempresent minmthemstatement mof mstockholders’mequity mand mthembalanc
emsheet. mThemincomemstatement mrepresents mcurrent mperiod mearnings.
Topic:mBalancemsheetmL
O:m3
9. If mamcompany mreportsmretainedmearningsmof m$242.6mmillionmonmitsmbalancemsheet,mitmwillma
lsomreportm$242.6mmillionminmcash.
Answer: mFalse
Rationale: mThemaccounting mequationmrequires mtotalmassets mto mequalmtotalmliabilities mplus mstockholders’
mequity. m That mdoes mnot mimply, mhowever, mthat mliability mand mequity maccounts mrelatemdirectly mtomspecific
massets.
Topic:mRegulationmandmOversight
mLO:m4
10. Them goalm of m them Sarbanes-
Oxley m Act m ofm 2002m was m to m increasem them levelm of m conf idencem that m externalmusers mhaveminmthemf ina
ncialmstatements.
Answer: mTrue
Rationale: mInmthemwakemof mscandals, mlikemthosemthat mtookmdownmEnron, mthemU.S. mCongress mpasse
d mthemSarbanes-Oxley mAct mto mimprovemexternalmusermconf idenceminmf inancialmstatement mreporting.
©CambridgemBusinessmPublishers,m2018
mynursytest.store
