Financial Accounting for MBAs
Learning Objectives – Coverage by question
True/False Multiple Choice
LO1 – Explain and assess the four main business
activities.
LO2 – Identify and discuss the users and suppliers
offinancial statement information.
1- 4 1, 2
LO3 – Describe and examine ...
TEST BANK FOR FINANCIAL
ACCOUNTING FOR MBAS 8TH
EDITION
, Module 1
Financial Accounting for MBAs
Learning Objectives – Coverage by question
True/False Multiple Choice
LO1 – Explain and assess the four main business
activities.
LO2 – Identify and discuss the users and suppliers 1- 4 1, 2
of financial statement information.
LO3 – Describe and examine the four financial 5-10 3-19
statements, and define the accounting equation.
LO4 – Explain and apply the basics of profitability 11-13 20-25
analysis.
LO5 – Assess business operations within the 14 26, 27
context of a competitive environment.
LO6 – Access reports filed with the SEC (Appendix
1A).
LO7 – Describe the accounting principles and
regulations that frame financial statements 15 28-30
(Appendix 1B).
These questions are available to assign in myBusinessCourse.
-
1-1 Financial Accounting for MBAs, 8th Edition
,Module 1: Financial Accounting for MBAs
True/False
Topic: Users of Financial Statement Information LO: 2
Shareholders demand financial information primarily to assess profitability and risk whereas bankers
demand information primarily to assess cash flows to repay loan interest and principal.
Answer: True
Rationale: While both shareholders and bankers are interested in all the information companies provide,
shareholders care about more about a company’s profitability and bankers care more about solvency and
creditworthiness.
Topic: Publicly Available Financial Reports LO: 2
Publicly traded companies are required to provide quarterly financial reports directly to the public.
Answer: False
Rationale: Companies provide electronic versions of quarterly financial statements to the SEC, which posts
them to the Internet for the public to access them.
Topic: Users of Financial Statement Information LO: 2
Publicly traded companies provide financial information primarily to satisfy the SEC and the tax
authorities (that is, the Internal Revenue Service).
Answer: False
Rationale: Demand for information extends to many users; the regulators such as the SEC and the IRS are
only one class of users.
Topic: SEC Filings LO: 2
Publicly traded companies must provide to the Securities Exchange Commission annual audited
financial statements (10-K reports) and quarterly audited financial statements (10-Q reports).
Answer: False
Rationale: Quarterly reports do not need to be audited.
Topic: Balance Sheet LO: 3
If a company reports retained earnings of $175.3 million on its balance sheet, it must also report
$175.3 million in cash.
Answer: False
Rationale: The accounting equation requires total assets to equal total liabilities plus stockholders’ equity.
That does not imply, however, that liability and equity accounts relate directly to specific assets.
-
Test Bank (T/F & MC), Module 1 1-2
, Topic: Balance Sheet LO: 3
A balance sheet shows a company’s position over a period of time, whereas an income statement,
statement of stockholders’ equity, and statement of cash flows show its position at a point in time.
Answer: False
Rationale: The statement is reversed: A balance sheet shows a company’s position at a point in time,
whereas an income statement, statement of equity, and statement of cash flows show its position over a
period of time.
Topic: Accounting Equation LO: 3
Assets must always equal liabilities plus equity.
Answer: True
Rationale: The accounting equation is Assets = Liabilities + Equity. This relation must always hold.
Topic: Income Statement LO: 3
The income statement reports net income which is defined as the company’s profit after all expenses and
dividends have been paid.
Answer: False
Rationale: The statement contains two errors. First, net income does not include any dividends during the
period; these are a distribution of profits and not part of its calculation. Second, the income statement is
prepared on an accrual basis and thus includes expenses incurred (as opposed to paid).
Topic: Statement of Cash Flows LO: 3
A statement of cash flows reports on cash flows for operating, investing and financing activities at a point in
time.
Answer: False
Rationale: A statement of cash flows reports on cash flows for operating, investing, and financing activities
over a period of time.
Topic: Statement of Stockholders’ Equity LO: 3
An increase in common stock would be reflected in the statement of stockholders’ equity.
Answer: True
Rationale: The statement of stockholders’ equity reports on changes in the accounts that make up
stockholders’ equity. This includes contributed capital, retained earnings, and other equity.
-
1-3 Financial Accounting for MBAs, 8th Edition
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Treypapers. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
