COMPLETE TEST BANK FOR FINANCIAL ACCOUNTING FOR MBAS 8TH EDITION BY PETER D. EASTON JOHN J. WILD ||LATEST EDITION WITH VERIFIED ACCURATE ANSWERS TO ALL MODULES.GRADE A+

TEST BANK FOR FINANCIAL ACCOUNTING FOR MBAS
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8TH EDITION BY EASTON
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, Module 1 vb




Financial Accounting for MBAs vb vb vb




Learning Objs – Coverage by question vb vb vb vb vb




True/False Multiple Choice
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LO1 – Explain and assess the four main business
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activities.
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LO2 – Identify and discuss the users and
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1- 4 vb 1, 2
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suppliers of financial statement information.
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LO3 – Describe and examine the four financial
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5-10 3-19
statements, and define the accounting equation.
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LO4 – Explain and apply the basics of profitability
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11-13 20-25
analysis.
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LO5 – Assess business operations within the
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14 26, 27
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context of a competitive environment.
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LO6 – Access reports filed with the SEC (Appendix
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1A).
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LO7 – Describe the accounting principles and
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regulations that frame financial statements
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(Appendix 1B).
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These questions are available to assign in myBusinessCourse.
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© vbCambridge vbBusiness vbPublishers, vb2021
1-1 Financial vbAccounting vbfor vbMBAs, vb8th vbEdition

,Module 1: Financial Accounting for MBAs
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True/False


TOPIC:Users of Financial Statement Information LO:
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2
1. Shareholders demand financial information primarily to assess profitability and risk whereas
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bankers demand information primarily to assess cash flows to repay loan interest and
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principal.
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ACCURATE ANSWER:-True vb


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

companies provide, shareholders care about more about a firm’s profitability and bankers
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care more about solvency and creditworthiness.
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TOPIC:Publicly Available Financial vb vb

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


Reasoning:->>->>>Companies provide electronic versions of quarterly financial statements to vb vb vb vb vb vb vb vb


the SEC, which posts them to the Internet for the public to access them.
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TOPIC:Users of Financial Statement Information LO:
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2
3. Publicly traded companies provide financial information primarily to
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SEC and the tax authorities (that is, the Internal Revenue Service).
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ACCURATE ANSWER:-False vb

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

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


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




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




ACCURATE ANSWER:-False vb

Reasoning:->>->>>The accounting equation requires total assets to equal total liabilities plus
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stockholders’ equity. That does not imply, however, that liability and equity accounts relate
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directly to specific assets.
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© vbCambridge vbBusiness vbPublishers, vb2021
Test vbBank vb(T/F vb&vbMC), vbModule vb1 1-2

, 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
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statement, statement of stockholders’ equity, and statement of cash flows show its
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position at a point in time.
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ACCURATE ANSWER:-False vb


Reasoning:->>->>>The statement is reversed: A balance sheet shows a firm’s position at avb vb vb vb vb vb vb vb vb vb vb vb

point in time, whereas an income statement, statement of equity, and statement of cash
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flows show its position over a period of time.
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TOPIC:Accounting
Equation LO: 3
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7. Assets must always equal liabilities plus equity.
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ACCURATE ANSWER:-True vb


Reasoning:->>->>>The accounting equation is Assets = Liabilities + Equity. This relation must always
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hold.
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TOPIC:Income Statement LO: vb vb

3
8. The income statement reports net income which is defined as the firm’s profit after all
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expenses and dividends have been paid.
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ACCURATE ANSWER:-False vb

Reasoning:->>->>>The statement contains two errors. First, net income does not include any
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dividends during the period; these are a distribution of profits and not part of its calculation.
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Second, the income statement is prepared on an accrual basis and thus includes expenses
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incurred (as opposed to paid).
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TOPIC:Statement of Cash vb vb

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

Reasoning:->>->>>A statement of cash flows reports on cash flows for operating, investing,
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and financing activities over a period of time.
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TOPIC:Statement of Stockholders’ Equity vb vb vb

LO: 3
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10. An increase in common stock would be reflected in the statement of stockholders’ equity.
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ACCURATE ANSWER:-True vb

Reasoning:->>->>>The statement of stockholders’ equity reports on changes in the accounts
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that make up stockholders’ equity. This includes contributed capital, retained earnings, and
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other equity.
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1-3 Financial vbAccounting vbfor vbMBAs, vb8th vbEdition