IVY Finance exam questions with correct
answers
Accounting Period - CORRECT ANSWERS ✔✔A period of time covered by an
accounting report
Conservatism - CORRECT ANSWERS ✔✔principle of conservatism states that the
accountant will be conservative in the measurement of financial data, thus
understating, rather than overstating, organizational income and assets.
Required Financial Statements - CORRECT ANSWERS ✔✔Balance sheet
Income Statement
Statement of Cash Flows
Statement of Owners Equity
Balance Sheet - CORRECT ANSWERS ✔✔A financial statement that reports assets,
liabilities, and owner's equity on a specific date.
Income Statement - CORRECT ANSWERS ✔✔shows all sources of revenues and
expenses
Statement of Owners Equity - CORRECT ANSWERS ✔✔reports investments by
stockholders into the firm and distributions (dividends) paid to them
Statement of Cash Flows - CORRECT ANSWERS ✔✔uses and sources of cash
,Types of financial performance ratios - CORRECT ANSWERS ✔✔Operating
performance ratios
Liquidity Ratios
Financial Strength Ratios
Operating Performance Ratios - CORRECT ANSWERS ✔✔indicate how well the
company is converting resources into results
Liquidity Ratios - CORRECT ANSWERS ✔✔Measures of the short-term ability of
the company to pay its maturing obligations and to meet unexpected needs for cash.
financial strength ratios - CORRECT ANSWERS ✔✔indicate the capitalization of the
company i.e its long-term debt and equity
What shows financial position at the end of an accounting period? - CORRECT
ANSWERS ✔✔Balance sheet
T/F: Footnotes merely restate information that is readily apparent in the statements
themselves - CORRECT ANSWERS ✔✔FALSE: they give more detail and can
explain how the information was derived
Which statement reports a firms financial situation on a given day? - CORRECT
ANSWERS ✔✔Statement of financial position AND balance sheet
, T/F: on an income statement, all of the expenses which reduce a firms earnings
involve an outlay of cash - CORRECT ANSWERS ✔✔FLASE: there are non cash
expenses such as depreciation
T/F: a payment of dividends reduces the balance of cash and common stock accounts
on a balance sheet - CORRECT ANSWERS ✔✔FLASE
Which of the following does not contribute to the derivation of return on equity
using the duping formula?
a. net income/sales
b. assets/equity
c. dividends/net income
d. sales/assets - CORRECT ANSWERS ✔✔c. dividends/net income
T/F: Management can improve its ROA by reducing investments in property, plant,
and equipment - CORRECT ANSWERS ✔✔TRUE
Which ratio can NOT be compared among firms? - CORRECT ANSWERS ✔✔EPS
In a healthy manufacturing company which ratio would have the smallest value? -
CORRECT ANSWERS ✔✔Asset turnover
T/F: financial strength ratios indicate a firms earning power - CORRECT ANSWERS
✔✔FALSE: they measure how a company is capitalized
DuPoint Equation - CORRECT ANSWERS ✔✔net income/sales x sales/assets x
assets/equity
answers
Accounting Period - CORRECT ANSWERS ✔✔A period of time covered by an
accounting report
Conservatism - CORRECT ANSWERS ✔✔principle of conservatism states that the
accountant will be conservative in the measurement of financial data, thus
understating, rather than overstating, organizational income and assets.
Required Financial Statements - CORRECT ANSWERS ✔✔Balance sheet
Income Statement
Statement of Cash Flows
Statement of Owners Equity
Balance Sheet - CORRECT ANSWERS ✔✔A financial statement that reports assets,
liabilities, and owner's equity on a specific date.
Income Statement - CORRECT ANSWERS ✔✔shows all sources of revenues and
expenses
Statement of Owners Equity - CORRECT ANSWERS ✔✔reports investments by
stockholders into the firm and distributions (dividends) paid to them
Statement of Cash Flows - CORRECT ANSWERS ✔✔uses and sources of cash
,Types of financial performance ratios - CORRECT ANSWERS ✔✔Operating
performance ratios
Liquidity Ratios
Financial Strength Ratios
Operating Performance Ratios - CORRECT ANSWERS ✔✔indicate how well the
company is converting resources into results
Liquidity Ratios - CORRECT ANSWERS ✔✔Measures of the short-term ability of
the company to pay its maturing obligations and to meet unexpected needs for cash.
financial strength ratios - CORRECT ANSWERS ✔✔indicate the capitalization of the
company i.e its long-term debt and equity
What shows financial position at the end of an accounting period? - CORRECT
ANSWERS ✔✔Balance sheet
T/F: Footnotes merely restate information that is readily apparent in the statements
themselves - CORRECT ANSWERS ✔✔FALSE: they give more detail and can
explain how the information was derived
Which statement reports a firms financial situation on a given day? - CORRECT
ANSWERS ✔✔Statement of financial position AND balance sheet
, T/F: on an income statement, all of the expenses which reduce a firms earnings
involve an outlay of cash - CORRECT ANSWERS ✔✔FLASE: there are non cash
expenses such as depreciation
T/F: a payment of dividends reduces the balance of cash and common stock accounts
on a balance sheet - CORRECT ANSWERS ✔✔FLASE
Which of the following does not contribute to the derivation of return on equity
using the duping formula?
a. net income/sales
b. assets/equity
c. dividends/net income
d. sales/assets - CORRECT ANSWERS ✔✔c. dividends/net income
T/F: Management can improve its ROA by reducing investments in property, plant,
and equipment - CORRECT ANSWERS ✔✔TRUE
Which ratio can NOT be compared among firms? - CORRECT ANSWERS ✔✔EPS
In a healthy manufacturing company which ratio would have the smallest value? -
CORRECT ANSWERS ✔✔Asset turnover
T/F: financial strength ratios indicate a firms earning power - CORRECT ANSWERS
✔✔FALSE: they measure how a company is capitalized
DuPoint Equation - CORRECT ANSWERS ✔✔net income/sales x sales/assets x
assets/equity
