TEST BANK
Financial Accounting for MBAs 8th Edition
by Easton
, Module1 `
Financial Accounting for MBAs
` ` `
Learning`Objectives`–`Coverage`by`question
True/False Multiple`Choice
LO1`–
`Explain`and`assess`the`four`main`business`activities.
LO2`–
1-`4 1,`2
`Identify`and`discuss`the`users`and`suppliers`of`financi
al`statement`information.
LO3`–
5-10 3-19
`Describe`and`examine`the`four`financial`statements,`
and`define`the`accounting`equation.
LO4`–
11-13 20-25
`Explain`and`apply`the`basics`of`profitability`analysis.
LO5`–
14 26,`27
`Assess`business`operations`within`the`context`of`a`co
mpetitive`environment.
LO6`–
`Access`reports`filed`with`the`SEC`(Appendix`1A).
LO7`–
`Describe`the`accounting`principles`and`regulations`th 15 28-30
at`frame`financial`statements`(Appendix`1B).
These`questions`are`available`to`assign`in`myBusinessCourse.
,Module`1:`Financial`Accounting`for`MBAs
True/False
Topic:`Users`of`Financial`Statement`Information`L
O:`2
1. Shareholders` demand`financial`information`primarily`to`assess`profitability`and`risk`whereas`bankers` d
emand`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`provid
e,`shareholders`care`about`more`about`a`company‘s`profitability`and`bankers`care`more`about`solven
cy`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` p
osts`them`to`the`Internet`for`the`public`to`access`them.
Topic:`Users`of`Financial`Statement`Information`L
O:`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‘`eq
uity.`That`does`not`imply,`however,`that`liability`and`equity`accounts`relate`directly`to`specific`assets.
Financial Accounting for MBAs 8th Edition
by Easton
, Module1 `
Financial Accounting for MBAs
` ` `
Learning`Objectives`–`Coverage`by`question
True/False Multiple`Choice
LO1`–
`Explain`and`assess`the`four`main`business`activities.
LO2`–
1-`4 1,`2
`Identify`and`discuss`the`users`and`suppliers`of`financi
al`statement`information.
LO3`–
5-10 3-19
`Describe`and`examine`the`four`financial`statements,`
and`define`the`accounting`equation.
LO4`–
11-13 20-25
`Explain`and`apply`the`basics`of`profitability`analysis.
LO5`–
14 26,`27
`Assess`business`operations`within`the`context`of`a`co
mpetitive`environment.
LO6`–
`Access`reports`filed`with`the`SEC`(Appendix`1A).
LO7`–
`Describe`the`accounting`principles`and`regulations`th 15 28-30
at`frame`financial`statements`(Appendix`1B).
These`questions`are`available`to`assign`in`myBusinessCourse.
,Module`1:`Financial`Accounting`for`MBAs
True/False
Topic:`Users`of`Financial`Statement`Information`L
O:`2
1. Shareholders` demand`financial`information`primarily`to`assess`profitability`and`risk`whereas`bankers` d
emand`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`provid
e,`shareholders`care`about`more`about`a`company‘s`profitability`and`bankers`care`more`about`solven
cy`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` p
osts`them`to`the`Internet`for`the`public`to`access`them.
Topic:`Users`of`Financial`Statement`Information`L
O:`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‘`eq
uity.`That`does`not`imply,`however,`that`liability`and`equity`accounts`relate`directly`to`specific`assets.
