Ivy Software Financial Accounting Final
Comprehensive Resource To Help You Ace
2026-2027 Includes Frequently Tested
Questions With ELABORATED 100% Correct
COMPLETE SOLUTIONS
Guaranteed Pass First Attempt!!
Current Update!!
1. The ratio that shows the markup in price over the cost of goods sold is
a) profit margins
b) gross margin ratio
c) return on assets
d) asset turnover
e) none - ANSWER Gross margin ratio
2. Conservatism - ANSWER given an uncertain and imprecise
environment, it is better to understate than overstate economic well-being
3. The ratio that shows how investors value the stock is
a) payout ratio
b) earnings per share
c) return on equity
d) return on assets
e) none - ANSWER None
,4. Understandability - ANSWER Financial conditions and results should be
communicated so that they are understandable by an educated user of
financial information
5. Relevance - ANSWER Financial data must also be relevant to a user to
be of value, extraneous information need not appear
6. Financial strength ratios are utilized to help predict the long-run solvency of
a company. T/F - ANSWER True
7. Ratio analysis is popular because ratios:
a) summarize important info
b) are useful in comparisons within a company over time
c) are useful in comparisons with other companies
d) all the above - ANSWER All the above
8. Consistency - ANSWER accounting entities must consistently apply the
elections available to them so that results from different periods can be
compared
9. ROE shows how much income was earned for every dollar invested by
owners. T/F - ANSWER True
10. Materiality - ANSWER there is a cost/benefit aspect to financial
reporting; insignificant data need not be reported if it would not affect a
user's decision making
,11. A company's annual report is used primarily by the taxing authorities. T/F -
ANSWER True
12. Managerial accounting is involved in:
a) external reports
b) internal reports
c) tax reports
d) economic reports - ANSWER Internal reports
13. Using an accelerated depreciation method for tax purposes would be an
example of:
a) managerial accounting
b) financial accounting
c) tax accounting
d) none - ANSWER Tax accounting
14. Owners in corporations are liable only for the amount they have invested
and no more. T/F - ANSWER True
15. Information that can make a difference to the decision at hand is
considered to be:
a) reliable
b) comparable
c) conservatism
d) understandability
e) none - ANSWER None - relevancy
, 16. In a proprietorship:
a) there is no legal distinction between the business and its owner
b) there is a distinction between the business and its owner for accounting
purposes
c) there is a legal distinction between the business and its owner
d) A&B - ANSWER A&B: There is no legal distinction between the business
and its owner, but there is a distinction between the two for accounting
purposes
17. Elson Inc estimated the useful life of a patent and amortized it over its
useful life. This GAAP is known as:
a) monetary concept
b) matching
c) economic entity
d) going concern
e) none - ANSWER Matching
18. Presenting an asset in the balance sheet at its historical cost less
accumulated depreciation is an example of:
a) managerial accounting
b) tax accounting
c) financial accounting
d) none - ANSWER Financial accounting
19. The quality that assumes that information is reasonably free from error is
a) relevant
b) conservatism
c) understandability
d) consistency
e) none - ANSWER None - reliability
Comprehensive Resource To Help You Ace
2026-2027 Includes Frequently Tested
Questions With ELABORATED 100% Correct
COMPLETE SOLUTIONS
Guaranteed Pass First Attempt!!
Current Update!!
1. The ratio that shows the markup in price over the cost of goods sold is
a) profit margins
b) gross margin ratio
c) return on assets
d) asset turnover
e) none - ANSWER Gross margin ratio
2. Conservatism - ANSWER given an uncertain and imprecise
environment, it is better to understate than overstate economic well-being
3. The ratio that shows how investors value the stock is
a) payout ratio
b) earnings per share
c) return on equity
d) return on assets
e) none - ANSWER None
,4. Understandability - ANSWER Financial conditions and results should be
communicated so that they are understandable by an educated user of
financial information
5. Relevance - ANSWER Financial data must also be relevant to a user to
be of value, extraneous information need not appear
6. Financial strength ratios are utilized to help predict the long-run solvency of
a company. T/F - ANSWER True
7. Ratio analysis is popular because ratios:
a) summarize important info
b) are useful in comparisons within a company over time
c) are useful in comparisons with other companies
d) all the above - ANSWER All the above
8. Consistency - ANSWER accounting entities must consistently apply the
elections available to them so that results from different periods can be
compared
9. ROE shows how much income was earned for every dollar invested by
owners. T/F - ANSWER True
10. Materiality - ANSWER there is a cost/benefit aspect to financial
reporting; insignificant data need not be reported if it would not affect a
user's decision making
,11. A company's annual report is used primarily by the taxing authorities. T/F -
ANSWER True
12. Managerial accounting is involved in:
a) external reports
b) internal reports
c) tax reports
d) economic reports - ANSWER Internal reports
13. Using an accelerated depreciation method for tax purposes would be an
example of:
a) managerial accounting
b) financial accounting
c) tax accounting
d) none - ANSWER Tax accounting
14. Owners in corporations are liable only for the amount they have invested
and no more. T/F - ANSWER True
15. Information that can make a difference to the decision at hand is
considered to be:
a) reliable
b) comparable
c) conservatism
d) understandability
e) none - ANSWER None - relevancy
, 16. In a proprietorship:
a) there is no legal distinction between the business and its owner
b) there is a distinction between the business and its owner for accounting
purposes
c) there is a legal distinction between the business and its owner
d) A&B - ANSWER A&B: There is no legal distinction between the business
and its owner, but there is a distinction between the two for accounting
purposes
17. Elson Inc estimated the useful life of a patent and amortized it over its
useful life. This GAAP is known as:
a) monetary concept
b) matching
c) economic entity
d) going concern
e) none - ANSWER Matching
18. Presenting an asset in the balance sheet at its historical cost less
accumulated depreciation is an example of:
a) managerial accounting
b) tax accounting
c) financial accounting
d) none - ANSWER Financial accounting
19. The quality that assumes that information is reasonably free from error is
a) relevant
b) conservatism
c) understandability
d) consistency
e) none - ANSWER None - reliability
