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    Financial & Managerial Accounting For Mbas, 5Th Edition by Easton, Halsey, Mcanally, Hartgraves & Morse Practice Quiz

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    Levi Alves

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    Financial & Managerial Accounting For Mbas, 5Th Edition by Easton, Halsey, Mcanally, Hartgraves & Morse Practice Quiz

    Uploaded by

    Levi Alves
    298 views3 pages

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    Finman 5e_Mod01_Quiz 080117

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    Financial & Managerial Accounting For Mbas, 5Th Edition by Easton, Halsey, Mcanally, Hartgraves & Morse Practice Quiz

    Uploaded by

    Levi Alves

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    The practice quiz covers concepts related to financial accounting including retained earnings, dividends, equity, return on equity, return on assets, and more.

    Retained earnings, equity, return on equity, and return on assets.

    Net income / Average stockholders' equity = €3,582 / €14,723.50 = 24.3%

    Financial & Managerial Accounting for MBAs, 5th Edition

    by Easton, Halsey, McAnally, Hartgraves & Morse

    Practice Quiz

    Module 1 – Financial Accounting for MBAs

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

    a. FASB (Financial Accounting Standards Board)


    b. IRS (Internal Revenue Service)
    c. AICPA (American Institute of Certified Public Accountants)
    d. SEC (Securities and Exchange Commission)

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

    ($ millions) 2017 2016


    Retained earnings…………. 8,968.1 8,223.9

    During 2017, Rocky Beach reported net income of $1,351.4 million. What amount of dividends, if
    any, did Rocky Beach pay to its shareholders in 2017?

    a. $607.2 million 8223.9 + 1351.4 - 8968.1 = 607.2


    b. No dividends paid
    c. $301.2 million
    d. $744.2 million

    3. At the beginning of a recent year, The Walt Disney Company’s liabilities equaled $26,197 million.
    During the year, assets increased by $400 million and year-end assets equaled $50,388 million.
    Liabilities decreased $100 million during the year. a1 = l1 + e1
    a1 + 400 = 50,388
    What were beginning and ending amounts for Walt Disney’s equity? a1 = 50,388 - 400 = 49,988
    l1 = 26,197
    a. $26,197 million beginning equity and $24,291 million ending equity e1 = 49,988 - 26,197 = 23,791
    b. $23,791 million beginning equity and $27,042 million ending equity a2=l2+e2
    c. $23,791 million beginning equity and $24,291 million ending equity l2=l1-100 = 26,097
    d. $27,042 million beginning equity and $25,183 million ending equity a2 = a1+400 = 50,388
    e2 = 50388 - 26097 = 24,291

    4. Assume that Starbucks reported net income for a recent year of $564 million. Its stockholders’
    equity is $2,229 million and $2,090 million, respectively.

    Compute its return on equity. net income = 564


    Stockholders' equity1 = 2,229
    a. 13.0% Stockholders' equity2 = 2,090
    b. 22.8%
    c. 26.1% avg Stockholders' equity = (2229 + 2090)/2 = 2,159.50
    d. 32.7%
    ROE = 564 / 2,159.50 =

    Cambridge Business Publishers, ©2018


    Practice Quiz, Module 1 1-1
    5. Nokia manufactures, markets, and sells phones and other electronics. Assume that Nokia reported
    net income of €3,582 on sales of €34,191 and total stockholders’ equity of €14,576 and €14,871,
    respectively.
    Net income = 3,582
    Sales = 34,191
    What is Nokia’s return on equity?
    Stockholders' equity y1 = 14,576
    Stockholders' equity y2 = 14,871
    a. 24.3%
    b. 42.3% avg Stockholders' equity = (14,576 + 14,871)/2 = 14,723.50
    c. 17.7%
    d. 10.5% ROE = 3582 / 14,723.50 = 0.243

    6. The total assets of Dell, Inc. equal $15,470 million and its equity is $4,873 million. What is the
    amount of its liabilities, and what percentage of financing is provided by Dell’s owners?

    a. $20,343 million, 24.0% A = 15,470 E/A = 4873/15470 = 0.315


    b. $10,597 million, 31.50% E = 4,873
    c. $10,597 million, 68.5% A=E+L
    d. $20,343 million, 76.0% L = 15,470 - 4,873 = 10,597

    7. The total assets of Ford Motor Company equal $315,920 million and its liabilities equal $304,269
    million. What is the amount of Ford’s equity and what percentage of financing is provided by its
    owners? A = 315,920
    L = 304,269
    a. $ 11,651 million, 3.9% E = A-L = 315,920 - 304,269 = 11,651
    b. $620,189 million, 49.1% E/A = 11651/315920 = 0.037
    c. $620,189 million, 50.9%
    d. $ 11,651 million, 3.7%

    8. Following are selected ratios of Canary Corp. for 2017 and 2016.

    Return on Assets (ROA) Component 2017 2016

    Profitability (Net income/Sales) …………… 26% 22%


    Productivity (Sales/Average net assets) ……. 1.2 1.1

    Compute the company’s return on assets (ROA) for 2017.


    ROA = net income/sales * sales;avg net assets
    a. 30.0%
    2017: ROA = 0.26 * 1.2 = 0.312
    b. 19.2%
    c. 12.1%
    d. 31.2%

    Cambridge Business Publishers, ©2018


    1-2 Financial & Managerial Accounting for MBAs, 5th Edition
    9. Nickle Company reports net income of $800 million for its fiscal year ended January 2017. At the
    beginning of that fiscal year, Nickle Company had $5,000 million in total assets. By fiscal year-end
    2017, total assets had grown to $6,500 million.

    What is Nickle’s return on assets (ROA)?


    net income = 800
    a. 13.9% A1=5,000
    b. 16.0% A2=6,500
    c. 12.3%
    d. 10.7% ROA = net income / avg assets = 800 / (5000+6500)/2 = 0.139

    10. The following table contains financial statement information for Izzy Corporation.

    ($ millions) Total Assets Net Income Sales Equity

    2016 ………………………….. $105,000 $10,000 $95,000 $30,000


    2017 ………………………….. $125,000 $11,000 $100,000 $31,000

    Compute the return on equity (ROE) and return on assets (ROA) for 2017.

    a. 25.5% ROE, 10.0% ROA ROE = net income / avg stockholders' equity
    b. 31.9% ROE, 11.2% ROA ROA = net income / avg assets
    c. 36.1% ROE, 9.6% ROA avg Stockholders' equity = 30,500
    d. 37.2% ROE, 13.1% ROA avg assets = 115,000

    ROE = 11000/30500 = 0.361


    ROA = 11000/115000 = 0.096

    Cambridge Business Publishers, ©2018


    Practice Quiz, Module 1 1-3

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