100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
TEST BANK FOR Financial & Managerial Accounting for MBAs, 6th Edition by Easton, Halsey, McAnally, Hartgraves & Morse $17.49   Add to cart

Exam (elaborations)

TEST BANK FOR Financial & Managerial Accounting for MBAs, 6th Edition by Easton, Halsey, McAnally, Hartgraves & Morse

 9 views  0 purchase

TEST BANK FOR Financial & Managerial Accounting for MBAs, 6th Edition by Easton, Halsey, McAnally, Hartgraves & Morse

Preview 4 out of 160  pages

  • September 14, 2024
  • 160
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • 9781618533463
book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:
All documents for this subject (3)
avatar-seller
Ascorers
Cambridge rBusiness rPublishers, r©2018
Practice rQuiz rSolutions, rModule r1 1-1

,Financial & Managerial Accounting for MBAs, 5th Edition by Easton, Halsey,
r r r r r r r r r r

McAnally, Hartgraves & Morse r r r r




Practice Quiz Solutions r r




Module 1 – Financial Accounting for MBAs
r r r r r r




1. Which of the following organizations does not contribute to the formation of GAAP?
r r r r r r r r r r r r




a. FASB (Financial Accounting Standards Board)
r r r r

b. IRS (Internal Revenue Service)
r r r

c. AICPA (American Institute of Certified Public Accountants)
r r r r r r

d. SEC (Securities and Exchange Commission)
r r r r




r Answer: b r




2. Rocky Beach reports the following dollar balances in its retained earnings account.
r r r r r r r r r r r




($ millions)
r 2017 2016
Retained earnings…………. r 8,968.1 8,223.9

During 2017, Rocky Beach reported net income of $1,351.4 million. What amount of dividends, if any,
r r r r r r r r r r r r r r r

did Rocky Beach pay to its shareholders in 2017?
r r r r r r r r r




a. $607.2 million r

b. No dividends paid
r r

c. $301.2 million r

d. $744.2 million r




r Answer: a r




Computation of dividends r r

Beginning retained earnings, 2017 ............................................................................
r r r r $8,223.9
+ Net income.................................................................................................................
r r 1,351.4
– Cash dividends...........................................................................................................
r (?)
= Ending retained earnings, 2017.................................................................................
r r r r $8,968.1

Thus, dividends were $607.2 million for 2017.
r r r r r r




Cambridge rBusiness rPublishers, r©2018
r1-2 Financial r& rManagerial rAccounting rfor rMBAs, r5th rEdition

,3. At the beginning of a recent year, The Walt Disney Company’s liabilities equaled $26,197 million.
r r r r r r r r r r r r r r

During the year, assets increased by $400 million and year-end assets equaled $50,388 million.
r r r r r r r r r r r r r r

Liabilities decreased $100 million during the year.
r r r r r r r




What were beginning and ending amounts for Walt Disney’s equity?
r r r r r r r r r




a. $26,197 million beginning equity and $24,291 million ending equity
r r r r r r r r

b. $23,791 million beginning equity and $27,042 million ending equity
r r r r r r r r

c. $23,791 million beginning equity and $24,291 million ending equity
r r r r r r r r

d. $27,042 million beginning equity and $25,183 million ending equity
r r r r r r r r




r Answer: c r




Using the accounting equation at the beginning of the year:
r r r r r r r r r




Assets($50,388 - $400) r r = Liabilities($26,197) + Equity(?)
r r r

Thus: Beginning Equity
r r = $23,791 r




Using the accounting equation at the end of the year:
r r r r r r r r r

Assets($50,388) = Liabilities($26,197 - $100) + Equity(?) r r r r r

Thus: Ending Equity
r = $24,291 r r




4. Assume that Starbucks reported net income for a recent year of $564 million. Its stockholders’
r r r r r r r r r r r r r r

equity is $2,229 million and $2,090 million, respectively.
r r r r r r r r




Compute its return on equity. r r r r




a. 13.0%
b. 22.8%
c. 26.1%
d. 32.7%

Answer: c r




ROE r = Net income / Average stockholders’ equity
r r r r r r r

= $564 million / [($2,229 million + $2,090 million) / 2] = 26.1%
r r r r r r r r r r r r




5. Nokia manufactures, markets, and sells phones and other electronics. Assume that Nokia reported
r r r r r r r r r r r r

net income of €3,582 on sales of €34,191 and total stockholders’ equity of €14,576 and €14,871,
r r r r r r r r r r r r r r r r

respectively.
r




What is Nokia’s return on equity?
r r r r r




a. 24.3%
b. 42.3%
c. 17.7%
d. 10.5%

Answer: a r




Return on equity is net income divided by the average total stockholders’ equity. Nokia’s
r r r r r r r r r r r r r

ROE: €3,582 / [(€14,576 + €14,871) / 2] = 24.3%.
r r r r r r r r r r




Cambridge rBusiness rPublishers, r©2018
Practice rQuiz rSolutions, rModule r1 1-3

, 6. The total assets of Dell, Inc. equal $15,470 million and its equity is $4,873 million. What is the
r r r r r r r r r r r r r r r r r

amount of its liabilities, and what percentage of financing is provided by Dell’s owners?
r r r r r r r r r r r r r r




a. $20,343 million, 24.0% r r

b. $10,597 million, 31.50% r r

c. $10,597 million, 68.5% r r

d. $20,343 million, 76.0% r r




Answer: b r




r ($ millions)
r


Assets = Liabilities + Equity
$15,470 $10,597 $4,873

Dell receives more of its financing from nonowners ($10,597 million) versus owners ($4,873 million).
r r r r r r r r r r r r r

Its owner financing comprises 31.5% of its total financing ($4,873 million/ $15,470 million).
r r r r r r r r r r r r r




7. The total assets of Ford Motor Company equal $315,920 million and its liabilities equal $304,269
r r r r r r r r r r r r r r

million. What is the amount of Ford’s equity and what percentage of financing is provided by its
r r r r r r r r r r r r r r r r r

owners?
r




a. $ 11,651 million, 3.9%
r r r

b. $620,189 million, 49.1% r r

c. $620,189 million, 50.9% r r

d. $ 11,651 million, 3.7%
r r r




Answer: d r




r ($ millions)
r


Assets = Liabilities + Equity
$315,920 $304,269 $11,651

Ford receives more of its financing from nonowners ($304,269 million) versus owners ($11,651
r r r r r r r r r r r r

million). Its owner financing comprises 3.7% of its total financing ($11,651 million/ $315,920 million).
r r r r r r r r r r r r r r

The relatively low level of equity capital is primarily the result of the fact that Ford is actually a blend
r r r r r r r r r r r r r r r r r r r r

of two companies: the automotive manufacturing company and the financial subsidiary. The financial
r r r r r r r r r r r r r

subsidiary has a balance sheet similar to that of a bank, that is, relatively little equity capital. The
r r r r r r r r r r r r r r r r r r

blend of these two operating entities results in a balance sheet that is more dependent on borrowed
r r r r r r r r r r r r r r r r r

funds than would be the case if Ford consisted solely of the manufacturing company.
r r r r r r r r r r r r r r




Cambridge rBusiness rPublishers, r©2018
r1-4 Financial r& rManagerial rAccounting rfor rMBAs, r5th rEdition

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

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

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

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 Ascorers. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $17.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

73918 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$17.49
  • (0)
  Add to cart