TEST BANK for Financial Accounting for MBAs 8th
Edition by Peter Easton & John Wild contains
verified questions and answers graded A+
2025/2026
, Module 1
Financial Accounting 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 Of
1- 4 1, 2
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 Of
14 26, 27
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.
Topic: Balance Sheet
LO: 3
6. A Balance Sheet Shows A Company’s Position Over A Period Of Time, Whereas An Income Statement,
Statement Of Stockholders’ Equity, And Statement Of Cash Flows Show Its Position At A Point In Time.
Answer: False
Rationale: The Statement Is Reversed: A Balance Sheet Shows A Company’s Position At A Point In Time,
Whereas An Income Statement, Statement Of Equity, And Statement Of Cash Flows Show Its Position Over A
Period Of Time.
Topic: Accounting Equation
LO: 3
7. Assets Must Always Equal Liabilities Plus Equity.
Answer: True
Rationale: The Accounting Equation Is Assets = Liabilities + Equity. This Relation Must Always Hold.
Topic: Income Statement LO:
3
8. The Income Statement Reports Net Income Which Is Defined As The Company’s Profit After All Expenses
And Dividends Have Been Paid.
Answer: False
Rationale: The Statement Contains Two Errors. First, Net Income Does Not Include Any Dividends During The
Period; These Are A Distribution Of Profits And Not Part Of Its Calculation. Second, The Income Statement Is
Prepared On An Accrual Basis And Thus Includes Expenses Incurred (As Opposed To Paid).
Topic: Statement Of Cash Flows LO:
3
9. A Statement Of Cash Flows Reports On Cash Flows For Operating, Investing And Financing Activities At A
Point In Time.
Answer: False
Rationale: A Statement Of Cash Flows Reports On Cash Flows For Operating, Investing, And Financing
Activities Over A Period Of Time.
Topic: Statement Of Stockholders’ Equity LO:
3
10. An Increase In Common Stock Would Be Reflected In The Statement Of Stockholders’ Equity.
Answer: True
Rationale: The Statement Of Stockholders’ Equity Reports On Changes In The Accounts That Make Up
Stockholders’ Equity. This Includes Contributed Capital, Retained Earnings, And Other Equity.
Return On Assets
4
Edition by Peter Easton & John Wild contains
verified questions and answers graded A+
2025/2026
, Module 1
Financial Accounting 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 Of
1- 4 1, 2
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 Of
14 26, 27
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.
Topic: Balance Sheet
LO: 3
6. A Balance Sheet Shows A Company’s Position Over A Period Of Time, Whereas An Income Statement,
Statement Of Stockholders’ Equity, And Statement Of Cash Flows Show Its Position At A Point In Time.
Answer: False
Rationale: The Statement Is Reversed: A Balance Sheet Shows A Company’s Position At A Point In Time,
Whereas An Income Statement, Statement Of Equity, And Statement Of Cash Flows Show Its Position Over A
Period Of Time.
Topic: Accounting Equation
LO: 3
7. Assets Must Always Equal Liabilities Plus Equity.
Answer: True
Rationale: The Accounting Equation Is Assets = Liabilities + Equity. This Relation Must Always Hold.
Topic: Income Statement LO:
3
8. The Income Statement Reports Net Income Which Is Defined As The Company’s Profit After All Expenses
And Dividends Have Been Paid.
Answer: False
Rationale: The Statement Contains Two Errors. First, Net Income Does Not Include Any Dividends During The
Period; These Are A Distribution Of Profits And Not Part Of Its Calculation. Second, The Income Statement Is
Prepared On An Accrual Basis And Thus Includes Expenses Incurred (As Opposed To Paid).
Topic: Statement Of Cash Flows LO:
3
9. A Statement Of Cash Flows Reports On Cash Flows For Operating, Investing And Financing Activities At A
Point In Time.
Answer: False
Rationale: A Statement Of Cash Flows Reports On Cash Flows For Operating, Investing, And Financing
Activities Over A Period Of Time.
Topic: Statement Of Stockholders’ Equity LO:
3
10. An Increase In Common Stock Would Be Reflected In The Statement Of Stockholders’ Equity.
Answer: True
Rationale: The Statement Of Stockholders’ Equity Reports On Changes In The Accounts That Make Up
Stockholders’ Equity. This Includes Contributed Capital, Retained Earnings, And Other Equity.
Return On Assets
4
