Test Bank for
Financial
Accounting
for MBAs 8th
Edition by
Easton
, Module1 !|
FinancialAccounting 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
||! ||! ||! ||! ||! ||! ||! ||!
1- 4 ||! 1, 2
||!
of financial statement information.
||! ||! ||! ||!
LO3 – Describe and examine the four financial
||! ||! ||! ||! ||! ||! ||!
5-10 3-19
statements, and define the accounting equation.
||! ||! ||! ||! ||! ||!
LO4 – Explain and apply the basics of profitability
||! ||! ||! ||! ||! ||! ||! ||!
11-13 20-25
analysis.
||!
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 ||!
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
||! ||! ||! ||! ||!
LO: 2
||! ||!
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax
||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||!
authorities (that is, the Internal Revenue Service).
||! ||! ||! ||! ||! ||! ||!
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.
||! ||! ||! ||! ||! ||! ||! ||!
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 ||!
, Rationale: The accounting equation requires total assets to equal total liabilities plus
||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||!
stockholders’ equity. That does not imply, however, that liability and equity accounts relate directly to
||! ||! |! |! |! ||! ||! |! ||! ||! ||! ||! |! |! ||!
specific assets.
|! |!
Financial
Accounting
for MBAs 8th
Edition by
Easton
, Module1 !|
FinancialAccounting 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
||! ||! ||! ||! ||! ||! ||! ||!
1- 4 ||! 1, 2
||!
of financial statement information.
||! ||! ||! ||!
LO3 – Describe and examine the four financial
||! ||! ||! ||! ||! ||! ||!
5-10 3-19
statements, and define the accounting equation.
||! ||! ||! ||! ||! ||!
LO4 – Explain and apply the basics of profitability
||! ||! ||! ||! ||! ||! ||! ||!
11-13 20-25
analysis.
||!
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 ||!
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
||! ||! ||! ||! ||!
LO: 2
||! ||!
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax
||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||!
authorities (that is, the Internal Revenue Service).
||! ||! ||! ||! ||! ||! ||!
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.
||! ||! ||! ||! ||! ||! ||! ||!
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 ||!
, Rationale: The accounting equation requires total assets to equal total liabilities plus
||! ||! ||! ||! ||! ||! ||! ||! ||! ||! ||!
stockholders’ equity. That does not imply, however, that liability and equity accounts relate directly to
||! ||! |! |! |! ||! ||! |! ||! ||! ||! ||! |! |! ||!
specific assets.
|! |!
