Financial Accounting Ivy Software FINAL - Financial Accounting Pre Assessment - Financial accounting -Mba prepworks Combined Sets Complete Solution For Easy Pass!!

Financial Acco unting Ivy Software FINAL - Financial Accounting Pre Asse ssment - Financial accounting -Mba prepworks Combined Sets Complete Solution For Easy Pass!! From a bankers perspective, the most important ratio on the customers financial statement is - ANSWER : Current Ratio Economic Entity - ANSWER : 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 - ANSWER : T imes interest earned and Payout Ratio Going Concern - ANSWER : 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 - ANSWER : False Monetary Unit - ANSWER : 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 - ANSWER : True Accounting Periods - ANSWER : 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 - ANSWER : Receivables and accounts payable Revenue/Epense matching - ANSWER : accounting entities should aspire to recognize expenses in the same accounting periods as the revenues they generate The ratio th at shows the markup in price over the cost of goods sold is profit margins gross margin ratio return on assets asset turnover none - ANSWER : Gross margin ratio Conservatism - ANSWER : given an uncertain and imprecise environment, it is better to und erstate 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 - ANSWER : None Understandability - ANSWER : Financial conditions and results should be communicated so that they are understandable by an educated user of financial information Relevance - ANSWER : 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 - ANSWER : True Ratio analysis is popular because ratios: summarize important info are useful in comparisons within a company over time are u seful in comparisons with other companies all the above - ANSWER : All the above Consistency - ANSWER : 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 - ANSWER : True 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 A company's annual report is used primarily by the taxing authorities. T/F - ANSWER : True Managerial accounting is involved in: external reports internal reports tax reports economic reports - ANSWER : Internal reports Using an accelerated depreciation method for tax purposes would be an example of: managerial accounting financial accounting tax accounting none - ANSWER : Tax accounting Owners in corporations are liable only for the amount they have invested and no m ore. T/F - ANSWER : True Information that can make a difference to the decision at hand is considered to be: reliable comparable conservatism understandability none - ANSWER : None - relevancy In a proprietorship: there is no legal distinction betw een the business and its owner there is a distinction between the business and its owner for accounting purposes there is a legal distinction between the business and its owner 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 Elson Inc estimated the useful life of a patent and amortized it over its useful life. This GAAP is known as: monetar y concept matching economic entity going concern none - ANSWER : Matching Presenting an asset in the balance sheet at its historical cost less accumulated depreciation is an example of: managerial accounting tax accounting financial accounting none - ANSWER : Financial accounting The quality that assumes that information is reasonably free from error is relevant conservatism understandability consistency none - ANSWER : None - reliability Preparing a production plan would be an example of: tax accounting managerial accounting financial accounting none of these - ANSWER : Managerial accounting The capital stock account combined with the retained earnings account reflects the valuation the open market places on the company. T/F - ANSWER : False Current assets are properly listed in order of liquidity on a balance sheet as shown in the following example: cash, accounts receivable, prepaid insurance, inventory. T/F - ANSWER : False Capital stock represents the markets value of the compan y. T/F - ANSWER : False The financial position at the end of a period is reflected on the: