DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
FinancialbManagement:bCorebConcepts,b4eb(Brooks)bChapte
rb2b FinancialbStatements
2.1b b FinancialbStatements
1) Thebpurposebofbstudyingbfinancialbstatementsbisb .
A) tobmechanicallybbuildbportfoliobanalysis
B) tobunderstandbthosebportionsbofbthebstatementsbthatbhavebrelevancebforbfinancialbdecisionb
making
C) tobprimarilybinvestigateballbportionsbofbthebstatementsbthatbhavebrelevancebforbdividendbpolicy
D) tobmechanicallyblearnbhowbtobreadbandbunderstandbfootnotesb
Answer:b B
Explanation:b AccountingbandbfinancebviewbthebnumbersbinbDIFFERENTbWAYS.bDiff
:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
2) WhichbofbthebstatementsbbelowbisbFALSE?
A) Thebpurposebofbstudyingbfinancialbstatementsbisbtobunderstandbthosebportionsbofbthebstatementsbt
hatbhavebrelevancebforbfinancialbdecisionbmaking.
B) Webneedbtobunderstandbhowbtobinterpretbandbusebthebinformationbpresentedbinbfinancialbs
tatementsbtobformbabpicturebofbthebfinancialbprofilebofbthebfirm.
C) Accounting,bitbhasbbeenbsaid,blooksbbackbtobwherebabcompanybhasbbeen—
somewhatblikeblookingbthroughbabrearbviewbmirror.
D) Accountingbandbfinancebviewbthebnumbersbinbthebsamebway.b
Answer:b D
Explanation:b AccountingbandbfinancebviewbthebnumbersbinbDIFFERENTbWAYS.bDiff
:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
3) Understandingbthebsourcesbandbusesbofbcashbinbthebrecentbpastbwillbenablebabmanagerbto
bthebcashbflowbforbabpotentialbprojectbofbthebfirm.
A) determinebwithbperfectbprecision
B) forecastbwithbperfectbprecision
C) predictbmorebaccurately
D) knowbtoday
bAnswer:b C bDi
ff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
1
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
4) Thebfundamentalbstartingbpointbofballbthebaccountingbstatementsbisbtheb .
A) accountingbidentity
B) computingbidentity
C) investingbidentity
D) financingbidentity
bAnswer:b A
Diff:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
5) WhichbofbthebstatementsbbelowbisbTRUE?
A) AccountingbIdentitybis:bAssetsb≡b Liabilitiesb-bOwners'bEquity.
B) AccountingbIdentitybis:bAssetsb≡b Liabilitiesb+bOwners'bEquity.
C) AccountingbIdentitybis:bAssetsb≡b Owners'bEquityb-bLiabilities.
D) AccountingbIdentitybis:bLiabilitiesb≡b Assetsb+bOwners'bEquity.b
Answer:b B
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
6) Therebarebfourbprimarybfinancialbstatementsbthatbarebusedbtobmeasurebthebperformancebofbabf
irm.bWhichbofbthebchoicesbbelowbarebincludedbamongbthesebfour?
A) Thebbalancebstatementbandbincomebstatement
B) Thebincomebsheetbandbstatementbofbretainedbearnings
C) Thebstatementbofbcashbflowsbandbstatementbofbbalance
D) Thebbalancebsheetbandbstatementbofbcashbflowsb
Answer:b D
Explanation:b Therebarebfourbprimarybfinancialbstatementsbthatbarebusedbtobmeasurebthebperformanc
ebofbabfirm:bthebincomebstatement,bthebbalancebsheet,bthebstatementbofbretainedbearnings,bandbthebs
tatementbofbcashbflowsb(alsobknownbasbsourcesbandbusesbofbcash).bTogether,bthesebfourbfinancialbst
atementsbcontainbmuchbofbthebessentialbhistoricalbinformationbaboutbthebperformancebandbmanagem
entbchoicesbofbabfirm.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
2
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
7) Itbisbimportantbtobrememberbthatbthebfundamentalb
bofbaccountingbisbthebdebit bandbcredit brecordingbactivitybwherebdebitsbalwaysbequalbcredits.
A) effect
B) endbproduct
C) outcome
D) identityb
Answer:bDb
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
8) Itbisbimportantbtobrememberbthatbthebfundamentalbidentitybofbaccountingbisbthebdebitbandbcreditbr
ecordingbactivitybwherebdebitsb bequalbcredits.
A) never
B) seldom
C) sometimes
D) alwaysb
Answer:b Db
Diff:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
9) WhichbofbthebstatementsbbelowbisbFALSE?
A) Thebincomebstatementbsummariesbandbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatb
period.
B) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany,bbutbusuallybmonthlybforbinternalbmanagers.
C) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilba
rrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).
D) Thebbalancebsheetbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsummarizesbandbc
ategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Answer:b D
Explanation:b Thebincomebstatementbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsu
mmarizesbandbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
3
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
, DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
10) WhichbofbthebbelowbstatementsbisbFALSE?
A) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany,bbutbusuallybsemiannuallybforbinternalbmanagers.
B) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany.
C) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilba
rrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).
D) Thebincomebstatementbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsummariesba
ndbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Answer:b A
Explanation:b Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionbout
sidebthebcompany,bbutbusuallybMONTHLYbforbinternalbmanagers.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
11) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilb
arrivingbatbthebintermediatebpointbofb .
A) earningsbafterbtaxes
B) netbincome
C) taxablebincome
D) EBIT
Answer:b D
Explanation:b Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpense
sbuntilbarrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).bNext,binterestbexpensebisbsubtractedb
tobfindbthebtaxablebincomebforbthebperiod.bThenbthebappropriatebtaxesbarebcalculatedbandbsubtracted
.bWebfinallybarrivebatbthebnetbincome,bthebso-calledbbottomblinebofbthebincomebstatement.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
4
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
b b b b b b b b b b
on Brooks b
FinancialbManagement:bCorebConcepts,b4eb(Brooks)bChapte
rb2b FinancialbStatements
2.1b b FinancialbStatements
1) Thebpurposebofbstudyingbfinancialbstatementsbisb .
A) tobmechanicallybbuildbportfoliobanalysis
B) tobunderstandbthosebportionsbofbthebstatementsbthatbhavebrelevancebforbfinancialbdecisionb
making
C) tobprimarilybinvestigateballbportionsbofbthebstatementsbthatbhavebrelevancebforbdividendbpolicy
D) tobmechanicallyblearnbhowbtobreadbandbunderstandbfootnotesb
Answer:b B
Explanation:b AccountingbandbfinancebviewbthebnumbersbinbDIFFERENTbWAYS.bDiff
:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
2) WhichbofbthebstatementsbbelowbisbFALSE?
A) Thebpurposebofbstudyingbfinancialbstatementsbisbtobunderstandbthosebportionsbofbthebstatementsbt
hatbhavebrelevancebforbfinancialbdecisionbmaking.
B) Webneedbtobunderstandbhowbtobinterpretbandbusebthebinformationbpresentedbinbfinancialbs
tatementsbtobformbabpicturebofbthebfinancialbprofilebofbthebfirm.
C) Accounting,bitbhasbbeenbsaid,blooksbbackbtobwherebabcompanybhasbbeen—
somewhatblikeblookingbthroughbabrearbviewbmirror.
D) Accountingbandbfinancebviewbthebnumbersbinbthebsamebway.b
Answer:b D
Explanation:b AccountingbandbfinancebviewbthebnumbersbinbDIFFERENTbWAYS.bDiff
:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
3) Understandingbthebsourcesbandbusesbofbcashbinbthebrecentbpastbwillbenablebabmanagerbto
bthebcashbflowbforbabpotentialbprojectbofbthebfirm.
A) determinebwithbperfectbprecision
B) forecastbwithbperfectbprecision
C) predictbmorebaccurately
D) knowbtoday
bAnswer:b C bDi
ff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
1
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
4) Thebfundamentalbstartingbpointbofballbthebaccountingbstatementsbisbtheb .
A) accountingbidentity
B) computingbidentity
C) investingbidentity
D) financingbidentity
bAnswer:b A
Diff:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
5) WhichbofbthebstatementsbbelowbisbTRUE?
A) AccountingbIdentitybis:bAssetsb≡b Liabilitiesb-bOwners'bEquity.
B) AccountingbIdentitybis:bAssetsb≡b Liabilitiesb+bOwners'bEquity.
C) AccountingbIdentitybis:bAssetsb≡b Owners'bEquityb-bLiabilities.
D) AccountingbIdentitybis:bLiabilitiesb≡b Assetsb+bOwners'bEquity.b
Answer:b B
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
6) Therebarebfourbprimarybfinancialbstatementsbthatbarebusedbtobmeasurebthebperformancebofbabf
irm.bWhichbofbthebchoicesbbelowbarebincludedbamongbthesebfour?
A) Thebbalancebstatementbandbincomebstatement
B) Thebincomebsheetbandbstatementbofbretainedbearnings
C) Thebstatementbofbcashbflowsbandbstatementbofbbalance
D) Thebbalancebsheetbandbstatementbofbcashbflowsb
Answer:b D
Explanation:b Therebarebfourbprimarybfinancialbstatementsbthatbarebusedbtobmeasurebthebperformanc
ebofbabfirm:bthebincomebstatement,bthebbalancebsheet,bthebstatementbofbretainedbearnings,bandbthebs
tatementbofbcashbflowsb(alsobknownbasbsourcesbandbusesbofbcash).bTogether,bthesebfourbfinancialbst
atementsbcontainbmuchbofbthebessentialbhistoricalbinformationbaboutbthebperformancebandbmanagem
entbchoicesbofbabfirm.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
2
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
7) Itbisbimportantbtobrememberbthatbthebfundamentalb
bofbaccountingbisbthebdebit bandbcredit brecordingbactivitybwherebdebitsbalwaysbequalbcredits.
A) effect
B) endbproduct
C) outcome
D) identityb
Answer:bDb
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
8) Itbisbimportantbtobrememberbthatbthebfundamentalbidentitybofbaccountingbisbthebdebitbandbcreditbr
ecordingbactivitybwherebdebitsb bequalbcredits.
A) never
B) seldom
C) sometimes
D) alwaysb
Answer:b Db
Diff:b1
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
9) WhichbofbthebstatementsbbelowbisbFALSE?
A) Thebincomebstatementbsummariesbandbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatb
period.
B) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany,bbutbusuallybmonthlybforbinternalbmanagers.
C) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilba
rrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).
D) Thebbalancebsheetbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsummarizesbandbc
ategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Answer:b D
Explanation:b Thebincomebstatementbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsu
mmarizesbandbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
3
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
, DOWNLOAD THE Test Bank for Financial Management Core Concepts 4th Editi
b b b b b b b b b b
on Brooks b
10) WhichbofbthebbelowbstatementsbisbFALSE?
A) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany,bbutbusuallybsemiannuallybforbinternalbmanagers.
B) Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionboutsidebthebc
ompany.
C) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilba
rrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).
D) Thebincomebstatementbreportsbthebperformancebofbthebfirmboverbthebpastbperiod.bItbsummariesba
ndbcategorizesbabcompany'sbrevenuesbandbexpensesbforbthatbperiod.
Answer:b A
Explanation:b Typically,bincomebstatementsbarebpreparedbquarterlybandbannuallybforbdistributionbout
sidebthebcompany,bbutbusuallybMONTHLYbforbinternalbmanagers.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
11) Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpensesbuntilb
arrivingbatbthebintermediatebpointbofb .
A) earningsbafterbtaxes
B) netbincome
C) taxablebincome
D) EBIT
Answer:b D
Explanation:b Thebincomebstatementbbeginsbwithbrevenuebandbsubtractsbvariousboperatingbexpense
sbuntilbarrivingbatbEarningsbBeforebInterestbandbTaxesb(EBIT).bNext,binterestbexpensebisbsubtractedb
tobfindbthebtaxablebincomebforbthebperiod.bThenbthebappropriatebtaxesbarebcalculatedbandbsubtracted
.bWebfinallybarrivebatbthebnetbincome,bthebso-calledbbottomblinebofbthebincomebstatement.
Diff:b2
Topic:b 2.1bFinancialbStatementsbAACSB
:b AnalyticalbThinking
LO:b 2.1bExplainbthebfoundationsbofbthebbalancebsheetbandbincomebstatement.
HmwrkbQuestions:b *bTakenbfromb"PreppingbforbExams"bquestionsbatbthebendbofbthebchapter.
4
Copyrightb©b2019bPearsonbEducation,bInc.
mynursytest.store
