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

Test Bank for FinancialAccounting for
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MBAs 8th Edition by Easton
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, Module1 s




FinancialAccounting for MBAs ss ss ss




Learning Objectives – Coverage by question ss ss ss ss ss




True/False Multiple Choice
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LO1 – Explain and assess the four main business
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activities.
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LO2 – Identify and discuss the users and suppliers of
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1- 4 ss 1, 2
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financial statement information.
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LO3 – Describe and examine the four financial
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5-10 3-19
statements, and define the accounting equation.
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LO4 – Explain and apply the basics of profitability
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11-13 20-25
analysis.
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LO5 – Assess business operations within the context
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14 26, 27
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of a competitive environment.
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LO6 – Access reports filed with the SEC (Appendix
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1A).
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LO7 – Describe the accounting principles and
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regulations that frame financial statements (Appendix
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1B).
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These questions are available to assign in myBusinessCourse.
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,Module 1: Financial Accounting for MBAs
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True/False


Topic: Users of Financial Statement Information
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LO: 2
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1. Shareholders demand financial information primarily to assess profitability and risk whereas
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bankers demand information primarily to assess cash flows to repay loan interest and principal.
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Answer: True ss



Rationale: While both shareholders and bankers are interested in all the information companies
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provide, shareholders care about more about a company‘s profitability and bankers care more
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about solvency and creditworthiness.
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Topic: Publicly Available Financial Reports
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LO: 2
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2. Publicly traded companies are required to provide quarterly financial reports directly to the public.
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Answer: False ss



Rationale: Companies provide electronic versions of quarterly financial statements to the SEC,
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which posts them to the Internet for the public to access them.
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Topic: Users of Financial Statement Information
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LO: 2
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3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax
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authorities (that is, the Internal Revenue Service).
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Answer: False ss



Rationale: Demand for information extends to many users; the regulators such as the SEC and the
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IRS are only one class of users.
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Topic: SEC Filings
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LO: 2
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4. Publicly traded companies must provide to the Securities Exchange Commission annual audited
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financial statements (10-K reports) and quarterly audited financial statements (10-Q reports).
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Answer: False ss



Rationale: Quarterly reports do not need to be audited.
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Topic: Balance Sheet
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LO: 3
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5. If a company reports retained earnings of $175.3 million on its balance sheet, it must also report
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$175.3 million in cash.
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Answer: False ss

, Rationale: The accounting equation requires total assets to equal total liabilities plus
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stockholders‘ equity. That does not imply, however, that liability and equity accounts relate directly to
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specific assets.
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