FINANCIAL ACCOUNTING FOR MBAS
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● Investing activities
Answer: companies acquire land, buildings, and equipment, grow the
business with new products and services, or acquire other companies to
expand into new markets.
●● Financing Activities
Answer: companies raise cash to fund the operating and investing
activities. This includes selling stock to equity investors and borrowing
from banks and other lenders.
●● Business Forces
Answer: Market conditions, competitive pressures, and regulations.
●● Four types of business activities
Answer: planning, financing, investing, operating
●● Strategic Plan
, Answer: How a company plans to achieve its goals and objectives.
Success depends on an analysis of demand and supply.
●● Investors
Answer: Use financial statement info to judge the company's
profitability and the value of the company's stock.
●● Lenders
Answer: Use financial statement info to assess the company's ability to
repay its debts and to determine how to manage credit risk.
●● Company Managers
Answer: Use financial statements to inform decisions such as where to
invest scarce resources, how to finance those investments, how to
maximize the company's profitability, and how much cash to maintain.
●● Covenants
Answer: loan conditions that restrict the borrower's behavior in some
fashion, such as minimum levels of working capital, retained earnings,
and cash flow.
●● Fundamental Analysis
Answer: Uses financial information to estimate company value and to
form buy-sell stock strategies.
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● Investing activities
Answer: companies acquire land, buildings, and equipment, grow the
business with new products and services, or acquire other companies to
expand into new markets.
●● Financing Activities
Answer: companies raise cash to fund the operating and investing
activities. This includes selling stock to equity investors and borrowing
from banks and other lenders.
●● Business Forces
Answer: Market conditions, competitive pressures, and regulations.
●● Four types of business activities
Answer: planning, financing, investing, operating
●● Strategic Plan
, Answer: How a company plans to achieve its goals and objectives.
Success depends on an analysis of demand and supply.
●● Investors
Answer: Use financial statement info to judge the company's
profitability and the value of the company's stock.
●● Lenders
Answer: Use financial statement info to assess the company's ability to
repay its debts and to determine how to manage credit risk.
●● Company Managers
Answer: Use financial statements to inform decisions such as where to
invest scarce resources, how to finance those investments, how to
maximize the company's profitability, and how much cash to maintain.
●● Covenants
Answer: loan conditions that restrict the borrower's behavior in some
fashion, such as minimum levels of working capital, retained earnings,
and cash flow.
●● Fundamental Analysis
Answer: Uses financial information to estimate company value and to
form buy-sell stock strategies.
