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

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EditionbyEaston
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, Module 1 vv




FinancialAccounting for MBAs gg gg




Learning Objectives – Coverage by question vv vv vv vv vv



True/False Multiple
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LO1 – Explain and
g g g g g g g g assess g g the g g four g g main
business activities.
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LO2 – Identify and discuss the users and
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1- g g 4 1, g g 2
suppliers offinancial statement information.
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LO3 – Describe and examine the four
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5-10 3-19
financial statements, and define the
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accounting equation.
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LO4 – Explain and
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11-13 20-25
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profitabilityanalysis.
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LO5 – Assess business operations within the
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contextof a competitive environment.
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LO6 – Access
g g g g g g reports g g filed g g with g g the g g SEC
(Appendix 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
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, Module 1: Financial Accounting for MBAs
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True/False


Topic: Users of Financial Statement
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ggInformation LO: 2 vv g g


1. Shareholders demand financial information primarily to g g g g g g g g g g g g assess profitability g g

and
g risk
g whereas bankers demand information primarily
g g g g gg g g g g g g g g to assess cash flows
g g g g g g

to repay loan interest and principal.
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Answer: True gg


Rationale: While both shareholders and bankers are interested in all the
gg gg gg gg gg gg gg gg gg gg gg information
companies provide, shareholders care about more about a company‘s
gg gg g g g g g g g g g g g g g g g g profitability
and bankers care more about solvency and creditworthiness.
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Topic: Publicly Available Financial
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ggReportsLO: 2 g g


2. Publicly traded companies are required to
gg g g gg gg gg g g provide quarterly financial reports
gg gg gg g g directly to the
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public.
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Answer: False gg


Rationale: Companies provide electronic
g versions
g g g g g g g g g of g g quarterly financial g g


statements
g g to the SEC, which posts them to g g g g gg g g g g g g g g g g the g g Internet for the public g g g g g g


to access them.
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Topic: Users of Financial Statement
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ggInformation LO: 2 vv g g


3. Publicly traded companies provide financial information primarily to satisfy the SEC
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and the tax authorities (that is, the Internal Revenue Service).
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Answer: False gg


Rationale: Demand for information extends to many users; the
g g g g g g g g g g g g g g g g g g regulators g g such
as the SEC
g g and the IRS are only one class of users.
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Topic: SEC gg


ggFilings LO: vv


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4. Publicly traded companies must provide to the Securities Exchange Commission
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annual audited financialstatements (10-K reports) and quarterly audited financial
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statements (10-Q reports).
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Answer: False gg


Rationale: Quarterly gg gg reports g g do g g not g g need g g to g g be g g audited.


Topic: Balance gg


ggSheet LO: 3 vv g g


5. If a company reports retained earnings of $175.3
g g g g million g g g g g g g g g g g g g g on g g its g g balance
sheet, it must also report $175.3 million in cash.
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Answer: False gg