,DOWNLOAD THE Test Bank for Financial Accounting for MBAs 7th EditionEaston
b b b b b b b b b b b
Module 1 b
Financial Accounting for MBAs
b b b
Learning Objectives – Coverage by question
b b b b b
True/False MultiplebChoice Exercises Problems Essays
LO1b–
1
bExplainbandbassessbthebfourb
mainbbusinessbactivities.
LO2b–
bIdentifybandbdiscussbtheb
usersb 1-b4 1,b2 2
andbsuppliersbofbfinancialbstate
mentbinformation.
LO3b–
bDescribebandbexamineb thebfo
5-10 3-19 1-8 1-5,b10 3,b4
urbfinancialbstatements,bandbd
efinebthebaccountingbequatio
n.
LO4b–
11-13 20-25 1,b9,b10 6,b7 5
bExplainbandbapplybthebbasics
bofbprofitabilitybanalysis.
LO5b–
bAssessbbusinessboperationsb 14 26,b27 8
withinbthebcontextbofbabcompe
titivebenvironment.
LO6b–
bAccessbreportsbfiledbwithbth
ebSECb(Appendixb1A).
LO7b –
b Describeb thebaccountingbprinc
15 28-30 9 6
iplesbandbregulationsbthatbfram
ebfinancialbstatementsb(Append
ixb1B).
©bCambridgebBusinessbPublishers,b201
8b1-1 FinancialbAccountingbforbMBAs,b7thbEditio
n
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Accounting for MBAs 7th EditionEaston
b b b b b b b b b b b
Module 1: Financial Accounting for MBAs
b b b b b
True/False
Topic:bUsersbofbFinancialbStatementbInformatio
nbLO:b2
1. Shareholdersb demandb financialb informationb primarilyb tob assessb profitabilityb andb riskb whereasb bankersb
demandbinformationbprimarilybtobassessbcashbflowsbtobrepaybloanbinterestbandbprincipal.
Answer:bTrue
Rationale:bWhilebbothbshareholdersbandbbankersbarebinterestedbinballbthebinformationbcompaniesbprovi
de,bshareholdersbcarebaboutbmorebaboutbabcompany’sbprofitabilitybandbbankersbcarebmorebaboutbsolve
ncybandbcreditworthiness.
Topic:bPubliclybAvailablebFinancialbReport
sbLO:b2
2. Publiclybtradedbcompaniesbarebrequiredbtobprovidebquarterlybfinancialbreportsbdirectlybtobthebpublic.
Answer:bFalse
Rationale:bCompaniesbprovidebelectronicbversionsbofbquarterlybfinancialbstatementsbtobthebSEC,bwhichb
postsbthembtobthebInternetbforbthebpublicbtobaccessbthem.
Topic:bUsersbofbFinancialbStatementbInformatio
nbLO:b2
3. Publiclyb tradedb companiesb provideb financialb informationb primarilyb tob satisfyb theb SECb andb theb taxb
authoritiesb(thatbis,bthebInternalbRevenuebService).
Answer:bFalse
Rationale:bDemandbforbinformationbextendsbtobmanybusers;bthebregulatorsbsuchbasbthebSECbandbthebIR
Sbarebonlybonebclassbofbusers.
Topic:bSECbFilingsb
LO:b2
4. Publiclyb tradedb companiesb mustb provideb tob theb Securitiesb Exchangeb Commissionb annualb auditedb
financialbstatementsb(10-Kbreports)bandbquarterlybauditedbfinancialbstatementsb(10-Qbreports).
Answer:bFalse
Rationale:bQuarterlybreportsbdobnotbneedbtobbebaudited.
Topic:bBalancebSheetb
LO:b3
5. Ifb ab companyb reportsb retainedb earningsb ofb $175.3b millionb onb itsb balanceb sheet,b itb mustb alsob report
$175.3bmillionbinbcash.
Answer:bFalse
Rationale:bThebaccountingbequationbrequiresbtotalbassetsbtobequalbtotalbliabilitiesbplusbstockholders’beq
uity.bThatbdoesbnotbimply,bhowever,bthatbliabilitybandbequitybaccountsbrelatebdirectlybtobspecificbassets.
©bCambridgebBusinessbPublishers,b2018
TestbBank,bModuleb1 1-2
mynursytest.store
, DOWNLOAD THE Test Bank for Financial Accounting for MBAs 7th EditionEaston
b b b b b b b b b b b
Topic:bBalancebSheetb
LO:b3
6. Ab balanceb sheetb showsb ab company’sb positionb overb ab periodb ofb time,b whereasb anb incomeb statement,b
statementbofbstockholders’bequity,bandbstatementbofbcashbflowsbshowbitsbpositionbatbabpointbinbtime.
Answer:bFalse
Rationale:bThebstatementbisbreversed:bAbbalancebsheetbshowsbabcompany’sbpositionbatbabpointbinbtime,
bwhereasbanbincomebstatement,bstatementbofbequity,bandbstatementbofbcashbflowsbshowbitsb positionbov
erbabperiodbofbtime.
Topic:bAccountingbEquationb
LO:b3
7. Assetsbmustbalwaysbequalbliabilitiesbplusbequity.
Answer:bTrue
Rationale:bThebaccountingbequationbisbAssetsb=bLiabilitiesb+bEquity.bThisbrelationbmustbalwaysbhold.
Topic:bIncomebStatementb
LO:b3
8. Thebincomebstatementbreportsbnetbincomebwhichbisbdefinedbasbtheb company’sbprofitbafterballbexpensesb
andbdividendsbhavebbeenbpaid.
Answer:bFalse
Rationale:bThebstatementbcontainsbtwoberrors.bFirst,bnetbincomebdoesbnotbincludebanybdividendsbduringb
thebperiod;bthesebarebabdistributionbofbprofitsbandbnotbpartbofbitsbcalculation.bSecond,bthebincomebstatem
entbisbpreparedbonbanbaccrualbbasisbandbthusbincludesbexpensesbincurredb(asbopposedbtobpaid).
Topic:bStatementbofbCashbFlow
sbLO:b3
9. Ab statementb ofb cashb flowsb reportsb onb cashb flowsb forb operating,b investingb andb financingb activitiesb atb ab
pointbinbtime.
Answer:b False
Rationale:bAbstatementbofbcashbflowsbreportsbonbcashbflowsbforboperating,binvesting,bandbfinancingbacti
vitiesboverbabperiodbofbtime.
Topic:bStatementbofbStockholders’bEquit
ybLO:b3
10. Anbincreasebinbcommonbstockbwouldbbebreflectedbinbthebstatementbofbstockholders’bequity.
Answer:b True
Rationale:bThebstatementbofbstockholders’bequitybreportsbonbchangesbinbthebaccountsbthatbmakebupbsto
ckholders’bequity.bThisbincludesbcontributedbcapital,bretainedb earnings,bandbotherbequity.
©bCambridgebBusinessbPublishers,b2018
1-3 FinancialbAccountingbforbMBAs,b7thbEdition
mynursytest.store
b b b b b b b b b b b
Module 1 b
Financial Accounting for MBAs
b b b
Learning Objectives – Coverage by question
b b b b b
True/False MultiplebChoice Exercises Problems Essays
LO1b–
1
bExplainbandbassessbthebfourb
mainbbusinessbactivities.
LO2b–
bIdentifybandbdiscussbtheb
usersb 1-b4 1,b2 2
andbsuppliersbofbfinancialbstate
mentbinformation.
LO3b–
bDescribebandbexamineb thebfo
5-10 3-19 1-8 1-5,b10 3,b4
urbfinancialbstatements,bandbd
efinebthebaccountingbequatio
n.
LO4b–
11-13 20-25 1,b9,b10 6,b7 5
bExplainbandbapplybthebbasics
bofbprofitabilitybanalysis.
LO5b–
bAssessbbusinessboperationsb 14 26,b27 8
withinbthebcontextbofbabcompe
titivebenvironment.
LO6b–
bAccessbreportsbfiledbwithbth
ebSECb(Appendixb1A).
LO7b –
b Describeb thebaccountingbprinc
15 28-30 9 6
iplesbandbregulationsbthatbfram
ebfinancialbstatementsb(Append
ixb1B).
©bCambridgebBusinessbPublishers,b201
8b1-1 FinancialbAccountingbforbMBAs,b7thbEditio
n
mynursytest.store
,DOWNLOAD THE Test Bank for Financial Accounting for MBAs 7th EditionEaston
b b b b b b b b b b b
Module 1: Financial Accounting for MBAs
b b b b b
True/False
Topic:bUsersbofbFinancialbStatementbInformatio
nbLO:b2
1. Shareholdersb demandb financialb informationb primarilyb tob assessb profitabilityb andb riskb whereasb bankersb
demandbinformationbprimarilybtobassessbcashbflowsbtobrepaybloanbinterestbandbprincipal.
Answer:bTrue
Rationale:bWhilebbothbshareholdersbandbbankersbarebinterestedbinballbthebinformationbcompaniesbprovi
de,bshareholdersbcarebaboutbmorebaboutbabcompany’sbprofitabilitybandbbankersbcarebmorebaboutbsolve
ncybandbcreditworthiness.
Topic:bPubliclybAvailablebFinancialbReport
sbLO:b2
2. Publiclybtradedbcompaniesbarebrequiredbtobprovidebquarterlybfinancialbreportsbdirectlybtobthebpublic.
Answer:bFalse
Rationale:bCompaniesbprovidebelectronicbversionsbofbquarterlybfinancialbstatementsbtobthebSEC,bwhichb
postsbthembtobthebInternetbforbthebpublicbtobaccessbthem.
Topic:bUsersbofbFinancialbStatementbInformatio
nbLO:b2
3. Publiclyb tradedb companiesb provideb financialb informationb primarilyb tob satisfyb theb SECb andb theb taxb
authoritiesb(thatbis,bthebInternalbRevenuebService).
Answer:bFalse
Rationale:bDemandbforbinformationbextendsbtobmanybusers;bthebregulatorsbsuchbasbthebSECbandbthebIR
Sbarebonlybonebclassbofbusers.
Topic:bSECbFilingsb
LO:b2
4. Publiclyb tradedb companiesb mustb provideb tob theb Securitiesb Exchangeb Commissionb annualb auditedb
financialbstatementsb(10-Kbreports)bandbquarterlybauditedbfinancialbstatementsb(10-Qbreports).
Answer:bFalse
Rationale:bQuarterlybreportsbdobnotbneedbtobbebaudited.
Topic:bBalancebSheetb
LO:b3
5. Ifb ab companyb reportsb retainedb earningsb ofb $175.3b millionb onb itsb balanceb sheet,b itb mustb alsob report
$175.3bmillionbinbcash.
Answer:bFalse
Rationale:bThebaccountingbequationbrequiresbtotalbassetsbtobequalbtotalbliabilitiesbplusbstockholders’beq
uity.bThatbdoesbnotbimply,bhowever,bthatbliabilitybandbequitybaccountsbrelatebdirectlybtobspecificbassets.
©bCambridgebBusinessbPublishers,b2018
TestbBank,bModuleb1 1-2
mynursytest.store
, DOWNLOAD THE Test Bank for Financial Accounting for MBAs 7th EditionEaston
b b b b b b b b b b b
Topic:bBalancebSheetb
LO:b3
6. Ab balanceb sheetb showsb ab company’sb positionb overb ab periodb ofb time,b whereasb anb incomeb statement,b
statementbofbstockholders’bequity,bandbstatementbofbcashbflowsbshowbitsbpositionbatbabpointbinbtime.
Answer:bFalse
Rationale:bThebstatementbisbreversed:bAbbalancebsheetbshowsbabcompany’sbpositionbatbabpointbinbtime,
bwhereasbanbincomebstatement,bstatementbofbequity,bandbstatementbofbcashbflowsbshowbitsb positionbov
erbabperiodbofbtime.
Topic:bAccountingbEquationb
LO:b3
7. Assetsbmustbalwaysbequalbliabilitiesbplusbequity.
Answer:bTrue
Rationale:bThebaccountingbequationbisbAssetsb=bLiabilitiesb+bEquity.bThisbrelationbmustbalwaysbhold.
Topic:bIncomebStatementb
LO:b3
8. Thebincomebstatementbreportsbnetbincomebwhichbisbdefinedbasbtheb company’sbprofitbafterballbexpensesb
andbdividendsbhavebbeenbpaid.
Answer:bFalse
Rationale:bThebstatementbcontainsbtwoberrors.bFirst,bnetbincomebdoesbnotbincludebanybdividendsbduringb
thebperiod;bthesebarebabdistributionbofbprofitsbandbnotbpartbofbitsbcalculation.bSecond,bthebincomebstatem
entbisbpreparedbonbanbaccrualbbasisbandbthusbincludesbexpensesbincurredb(asbopposedbtobpaid).
Topic:bStatementbofbCashbFlow
sbLO:b3
9. Ab statementb ofb cashb flowsb reportsb onb cashb flowsb forb operating,b investingb andb financingb activitiesb atb ab
pointbinbtime.
Answer:b False
Rationale:bAbstatementbofbcashbflowsbreportsbonbcashbflowsbforboperating,binvesting,bandbfinancingbacti
vitiesboverbabperiodbofbtime.
Topic:bStatementbofbStockholders’bEquit
ybLO:b3
10. Anbincreasebinbcommonbstockbwouldbbebreflectedbinbthebstatementbofbstockholders’bequity.
Answer:b True
Rationale:bThebstatementbofbstockholders’bequitybreportsbonbchangesbinbthebaccountsbthatbmakebupbsto
ckholders’bequity.bThisbincludesbcontributedbcapital,bretainedb earnings,bandbotherbequity.
©bCambridgebBusinessbPublishers,b2018
1-3 FinancialbAccountingbforbMBAs,b7thbEdition
mynursytest.store
