Financial Accounting Ivy Software
UPDATED ACTUAL Questions and
CORRECT Answers
From a bankers perspective, the most important ratio on the customers financial statement is -
CORRECT ANSWER - Current Ratio
Which of the following is an operating performance ratio?
Debt to total assets
Times interest earned
Payout ratio
Times interest earned and payout ratio
None - CORRECT ANSWER - Times interest earned and Payout Ratio
Horizontal analysis compares the components of a balance sheet with a base item. T/F -
CORRECT ANSWER - False
Since companies have different numbers of shares outstanding, it is not useful to compare
earnings per share ratios. T/F - CORRECT ANSWER - True
There are two ratios that help define the operating cycle. They are:
receivables and inventory turnover
receivables and accounts payable
inventory and accounts payable turnover
,none of these - CORRECT ANSWER - Receivables and accounts payable
The ratio that shows the markup in price over the cost of goods sold is
profit margins
gross margin ratio
return on assets
asset turnover
none - CORRECT ANSWER - Gross margin ratio
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none - CORRECT ANSWER - None
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F -
CORRECT ANSWER - True
Ratio analysis is popular because ratios:
summarize important info
are useful in comparisons within a company over time
are useful in comparisons with other companies
, all the above - CORRECT ANSWER - All the above
ROE shows how much income was earned for every dollar invested by owners. T/F - CORRECT
ANSWER - True
A company's annual report is used primarily by the taxing authorities. T/F - CORRECT
ANSWER - True
Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - CORRECT ANSWER - Internal reports
Using an accelerated depreciation method for tax purposes would be an example of:
managerial accounting
financial accounting
tax accounting
none - CORRECT ANSWER - Tax accounting
Owners in corporations are liable only for the amount they have invested and no more. T/F -
CORRECT ANSWER - True
Information that can make a difference to the decision at hand is considered to be:
reliable
UPDATED ACTUAL Questions and
CORRECT Answers
From a bankers perspective, the most important ratio on the customers financial statement is -
CORRECT ANSWER - Current Ratio
Which of the following is an operating performance ratio?
Debt to total assets
Times interest earned
Payout ratio
Times interest earned and payout ratio
None - CORRECT ANSWER - Times interest earned and Payout Ratio
Horizontal analysis compares the components of a balance sheet with a base item. T/F -
CORRECT ANSWER - False
Since companies have different numbers of shares outstanding, it is not useful to compare
earnings per share ratios. T/F - CORRECT ANSWER - True
There are two ratios that help define the operating cycle. They are:
receivables and inventory turnover
receivables and accounts payable
inventory and accounts payable turnover
,none of these - CORRECT ANSWER - Receivables and accounts payable
The ratio that shows the markup in price over the cost of goods sold is
profit margins
gross margin ratio
return on assets
asset turnover
none - CORRECT ANSWER - Gross margin ratio
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none - CORRECT ANSWER - None
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F -
CORRECT ANSWER - True
Ratio analysis is popular because ratios:
summarize important info
are useful in comparisons within a company over time
are useful in comparisons with other companies
, all the above - CORRECT ANSWER - All the above
ROE shows how much income was earned for every dollar invested by owners. T/F - CORRECT
ANSWER - True
A company's annual report is used primarily by the taxing authorities. T/F - CORRECT
ANSWER - True
Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - CORRECT ANSWER - Internal reports
Using an accelerated depreciation method for tax purposes would be an example of:
managerial accounting
financial accounting
tax accounting
none - CORRECT ANSWER - Tax accounting
Owners in corporations are liable only for the amount they have invested and no more. T/F -
CORRECT ANSWER - True
Information that can make a difference to the decision at hand is considered to be:
reliable
