Financial Accounting Ivy Software
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
,Financial Accounting Ivy Software
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
, Financial Accounting Ivy Software
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
comparable
conservatism
understandability
none - ✔✔ correct answer None - relevancy
In a proprietorship:
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
,Financial Accounting Ivy Software
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
, Financial Accounting Ivy Software
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
comparable
conservatism
understandability
none - ✔✔ correct answer None - relevancy
In a proprietorship:
