Test Bank for Financial Accounting for MBAs, 8th Edition, by Peter Easton & John Wild, All Chapters 1-13 LATESTFinancial Accounting

TEST BANK FOR FINANCIAL ACCOUNTING FOR MBAS
8TH EDITION BY EASTON

, Module 1 TH




FinancialAccountingforMBAs T
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Learning Objs –Coverage byquestion TH TH T
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True/False Multiple Choice
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LO1 – TH




Explain and assess the four main business activities.
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LO2 –
1- 4 1, 2
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Identify and discuss the users and suppliers of financ
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ial statement information.
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LO3 –
5-10 3-19
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Describe and examine the four financial statements,
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and define the accounting equation.
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LO4 –
11-13 20-25
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Explain and apply the basics of profitability analysis.
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LO5 –
14 26, 27
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Assess business operations within the context of a c
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ompetitive environment. TH




LO6 – TH




Access reports filed with the SEC (Appendix 1A).
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LO7 – TH




Describe the accounting principles and regulations t
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hat frame financial statements (Appendix 1B).
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These questions are available to assign in myBusinessCourse.
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© Cambridge Business Publishers, 2021
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1-1 Financial Accounting for MBAs, 8th Edition
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,Module 1: Financial Accounting for MBAs TH TH TH TH TH




True/False


TOPIC:Users of Financial Statement Information LO: TH TH TH TH TH




2
1. Shareholders demand financial information primarily to assess profitability and risk whereas bankers
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demand information primarily to assess cash flows to repay loan interest and principal.
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ACCURATE ANSWER:-True TH




Reasoning:->>-
>>>While both shareholders and bankers are interested in all the information companies provide, shar
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eholders care about more about a firm’s profitability and bankers care more about solvency and credit
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worthiness.


TOPIC:Publicly Available Financial Report TH TH TH




s 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 TH




Reasoning:->>-
>>>Companies provide electronic versions of quarterly financial statements to the SEC, which posts t
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hem to the Internet for the public to access them.
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TOPIC:Users of Financial Statement Information LO: TH TH TH TH TH




2
3. Publicly traded companies provide financial information primarily to satisfy the SEC and th
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e tax authorities (that is, the Internal Revenue Service).
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ACCURATE ANSWER:-False TH




Reasoning :->>- TH




>>>Demand for information extends to many users; the regulators such as the SEC and the IRS are o
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nly one class of users.
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TOPIC:SEC Filings LO: TH TH




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




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




TOPIC:Balance She TH




et LO: 3
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5. If a firm reports retained earnings of $175.3 million on its balance sheet, it must also report
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$175.3 million in cash. TH TH TH




ACCURATE ANSWER:-False TH




Reasoning:->>-
>>>The accounting equation requires total assets to equal total liabilities plus stockholders’ equity. Th
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at does not imply, however, that liability and equity accounts relate directly to specific assets.
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© Cambridge Business Publishers, 2021
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Test Bank (T/F & MC), Module 1
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, TOPIC:Balance She TH




et LO: 3
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6. A balance sheet shows a firm’s position over a period of time, whereas an income statement, state
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ment of stockholders’ equity, and statement of cash flows show its position at a point in time.
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ACCURATE ANSWER:-False TH




Reasoning:->>-
>>>The statement is reversed: A balance sheet shows a firm’s position at a point in time, whereas an i
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ncome statement, statement of equity, and statement of cash flows show its position over a period o
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f time.
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TOPIC:Accounting Equati TH




on LO: 3
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7. Assets must always equal liabilities plus equity. TH TH TH TH TH TH




ACCURATE ANSWER:-True TH




Reasoning:->>->>>The accounting equation is Assets = Liabilities + Equity. This relation must always hold. TH TH TH TH TH TH TH TH TH TH TH TH TH




TOPIC:Income Statement LO: TH TH




3
8. The income statement reports net income which is defined as the firm’s profit after all expenses and
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dividends have been paid. TH TH TH




ACCURATE ANSWER:-False TH




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




ws LO: 3TH TH




9. A statement of cash flows reports on cash flows for operating, investing and financing activities at a
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point in time. TH TH




ACCURATE ANSWER:-False TH




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




LO: 3 TH




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




Reasoning:->>-
>>>The statement of stockholders’ equity reports on changes in the accounts that make up stockhold
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ers’ equity. This includes contributed capital, retained earnings, and other equity.
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1-3 Financial Accounting for MBAs, 8th Edition TH TH TH TH TH