FINANCIAL ACCOUNTING IVY SOFTWARE FINAL EXAM
|NEW AND UPDATED WITH VERIFIED QUESTIONS AND
ANSWERS!!!
From a bankers perspective, the most important ratio on the customers financial
statement is
Current Ratio
Economic Entity
one firm, one set of books
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
Times interest earned and Payout Ratio
Going Concern
a firm has value beyond the liquidation value of its assets
Horizontal analysis compares the components of a balance sheet with a base
item. T/F
,False
Monetary Unit
financial transactions are denominated in a stable unit of measure
Since companies have different numbers of shares outstanding, it is not useful to
compare earnings per share ratios. T/F
True
Accounting Periods
the result of operations for an entity must be reported on a periodic basis, usually
a year
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
Receivables and accounts payable
Revenue/Epense matching
accounting entities should aspire to recognize expenses in the same accounting
periods as the revenues they generate
,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
Gross margin ratio
Conservatism
given an uncertain and imprecise environment, it is better to understate than
overstate economic well-being
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none
None
Understandability
Financial conditions and results should be communicated so that they are
understandable by an educated user of financial information
Relevance
, Financial data must also be relevant to a user to be of value, extraneous
information need not appear
Financial strength ratios are utilized to help predict the long-run solvency of a
company. T/F
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
All the above
Consistency
accounting entities must consistently apply the elections available to them so that
results from different periods can be compared
ROE shows how much income was earned for every dollar invested by owners. T/F
True
Materiality
|NEW AND UPDATED WITH VERIFIED QUESTIONS AND
ANSWERS!!!
From a bankers perspective, the most important ratio on the customers financial
statement is
Current Ratio
Economic Entity
one firm, one set of books
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
Times interest earned and Payout Ratio
Going Concern
a firm has value beyond the liquidation value of its assets
Horizontal analysis compares the components of a balance sheet with a base
item. T/F
,False
Monetary Unit
financial transactions are denominated in a stable unit of measure
Since companies have different numbers of shares outstanding, it is not useful to
compare earnings per share ratios. T/F
True
Accounting Periods
the result of operations for an entity must be reported on a periodic basis, usually
a year
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
Receivables and accounts payable
Revenue/Epense matching
accounting entities should aspire to recognize expenses in the same accounting
periods as the revenues they generate
,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
Gross margin ratio
Conservatism
given an uncertain and imprecise environment, it is better to understate than
overstate economic well-being
The ratio that shows how investors value the stock is
payout ratio
earnings per share
return on equity
return on assets
none
None
Understandability
Financial conditions and results should be communicated so that they are
understandable by an educated user of financial information
Relevance
, Financial data must also be relevant to a user to be of value, extraneous
information need not appear
Financial strength ratios are utilized to help predict the long-run solvency of a
company. T/F
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
All the above
Consistency
accounting entities must consistently apply the elections available to them so that
results from different periods can be compared
ROE shows how much income was earned for every dollar invested by owners. T/F
True
Materiality
