test bank for financial accounting for mbas 8th edition by easton 2025 update!! GRADED A+

TEST BANK FOR FINANCIAL ACCOUNTING FOR MBAS 8TH
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kEDITIONBYEASTON
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, Module 1 a




FinancialAccountingforMBAs
Learning Objs – Coverage by question a a a a a



True/False Multiple Choice
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LO1 –k




Explain and assess the four main business activities.
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LO2 –
1- 4 1, 2
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Identify and discuss the users and suppliers of financi al
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statement information.
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LO3 –
5-10 3-19
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Describe and examine the four financial statements,
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and define the accounting equation.
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LO4 –
11-13 20-25
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Explain and apply the basics of profitability analysis.
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LO5–
14 26, 27
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Assess business operations within the context of a co
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mpetitive environment.
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LO6–Access reports filed withthe SEC(Appendix 1A).
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LO7 – k




Describe the accounting principles and regulations t hat
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frame financial statements (Appendix 1B).
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Thesequestions are availabletoassign in myBusinessCourse.
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©aCambridge Business Publishers, 2021
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1-1 Financial AccountingaforaMBAs, 8th Edition
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,Module 1: Financial Accounting for MBAs a a a a a




True/False


TOPIC:Users of Financial Statement Information LO: k k k a k




2
1. Shareholders demand financial information primarily toassess profitability and risk whereas bankers
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demand information primarily to assess cash flows to repay loan interest and principal.
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ACCURATE ANSWER:-True k




Reasoning:->>-
>>>While both shareholders and bankers are interested in all the information companies provide, share
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holders care about more about a firm‘s profitability and bankers care more about solvency and creditwo
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rthiness.
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TOPIC:Publicly Available Financial Report s k k k k




LO: 2
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2. Publiclytradedcompanies arerequiredtoprovide quarterly financial reports directly tothe public.
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ACCURATE ANSWER:-False k




Reasoning:->>-
>>>Companies provide electronic versions of quarterly financial statements to the SEC, which posts th emk k k k k k k k k k k k k k




to the Internet for the public to access them.
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TOPIC:Users of Financial Statement Information LO: k k k a k




2
3. Publicly traded companies provide financial information primarily to satisfy the SEC and the tax a
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uthorities (that is, the Internal Revenue Service).
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ACCURATE ANSWER:-False k




Reasoning :->>- k




>>>Demand for information extends to many users; the regulators such as the SEC and the IRS are onl y one
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class of users.
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TOPIC:SECFilingsLO: k k




2
4. Publicly traded companies must provide to the Securities Exchange Commission annual audited f
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inancial statements (10-K reports) and quarterly audited financial statements (10-Q reports).
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ACCURATE ANSWER:-False k




Reasoning:->>->>>Quarterly reports do not needto be audited. k k a k k k k




TOPIC:BalanceShe k




et LO: 3
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5. If a firm reports retained earnings of $175.3 million on its balance sheet, it must also report
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$175.3 million incash. k k k




ACCURATE ANSWER:-False k




Reasoning:->>-
>>>The accounting equation requires total assets to equal total liabilities plus stockholders‘ equity. Tha t
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does not imply, however, that liability and equity accounts relate directly to specific assets.
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©aCambridge Business Publishers, 2021 k k k




TestaBank (T/Fa& MC), Module 1
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, TOPIC:BalanceShe k




et LO: 3
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6. A balance sheet shows a firm‘s position over a period of time, whereas an income statement, statem ent of
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stockholders‘ equity, and statement of cash flows show its position at a point in time.
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ACCURATE ANSWER:-False k




Reasoning:->>-
>>>The statement is reversed: A balance sheet shows a firm‘s position at a point in time, whereas an in
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come statement, statement of equity, and statement of cash flows show its position over a period of tim e.
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TOPIC:AccountingEquati k




on LO: 3
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7. Assetsmust always equal liabilitiesplus equity.
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ACCURATE ANSWER:-True k




Reasoning:->>->>>TheaccountingequationisAssets = Liabilities + Equity. This relationmust always hold. k k k k k k k k k k k k k




TOPIC:Income Statement LO: k k




3
8. The income statement reports net income which is defined as the firm‘s profit after all expenses and di
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vidends have been paid.
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ACCURATE ANSWER:-False k




Reasoning:->>-
>>>The statement contains two errors. First, net income does not include any dividends during the peri od;
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these are a distribution of profits and not part of its calculation. Second, the income statement is pre pared on
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an accrual basis and thus includes expenses incurred (as opposed to paid).
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TOPIC:Statement ofCashFlo a k k




ws LO: 3
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9. A statement of cashflows reports on cash flows for operating, investing and financing activities at a p oint in
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time. k




ACCURATE ANSWER:-False k




Reasoning:->>-
>>>A statement of cash flows reports on cash flows for operating, investing, and financing activities ove r a
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period of time.
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TOPIC:Statement of Stockholders’ Equity a k k




LO: 3
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10. Anincreaseincommonstock would be reflectedinthestatement of stockholders‘ equity.
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ACCURATE ANSWER:-True k




Reasoning:->>-
>>>The statement of stockholders‘ equity reports on changes in the accounts that make up stockholder s‘
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equity. This includes contributed capital, retained earnings, and other equity.
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1-3 Financial Accountingafor MBAs, 8th Edition k k k k