Corporate Finance - Ivy Software
Complete Exam Study Questions
with Verified Answers
1. From a banker’s perspective, the most important ratio on the customer’s
financial statement is - ANSWER Current Ratio
2. 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 Times interest earned and Payout Ratio
3. A company's annual report is used primarily by the taxing authorities. T/F -
ANSWER True
4. Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - ANSWER Internal reports
,5. Using an accelerated depreciation method for tax purposes would be an
example of:
managerial accounting
financial accounting
tax accounting
none - ANSWER Tax accounting
6. Owners in corporations are liable only for the amount they have invested
and no more. T/F - ANSWER True
7. Information that can make a difference to the decision at hand is considered
to be:
reliable
comparable
conservatism
understandability
none - ANSWER None - relevancy
8. In a proprietorship:
there is no legal distinction between 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
9. Elson Inc estimated the useful life of a patent and amortized it over its useful
life. This GAAP is known as:
monetary concept
matching
economic entity
going concern
none - ANSWER Matching
10.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
11.The quality that assumes that information is reasonably free from error is
relevant
, conservatism
understandability
consistency
none - ANSWER None - reliability
12.Preparing a production plan would be an example of:
tax accounting
managerial accounting
financial accounting
none of these - ANSWER Managerial accounting
13.Horizontal analysis compares the components of a balance sheet with a base
item. T/F - ANSWER False
14.Since companies have different numbers of shares outstanding, it is not
useful to compare earnings per share ratios. T/F - ANSWER True
15.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
Complete Exam Study Questions
with Verified Answers
1. From a banker’s perspective, the most important ratio on the customer’s
financial statement is - ANSWER Current Ratio
2. 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 Times interest earned and Payout Ratio
3. A company's annual report is used primarily by the taxing authorities. T/F -
ANSWER True
4. Managerial accounting is involved in:
external reports
internal reports
tax reports
economic reports - ANSWER Internal reports
,5. Using an accelerated depreciation method for tax purposes would be an
example of:
managerial accounting
financial accounting
tax accounting
none - ANSWER Tax accounting
6. Owners in corporations are liable only for the amount they have invested
and no more. T/F - ANSWER True
7. Information that can make a difference to the decision at hand is considered
to be:
reliable
comparable
conservatism
understandability
none - ANSWER None - relevancy
8. In a proprietorship:
there is no legal distinction between 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
9. Elson Inc estimated the useful life of a patent and amortized it over its useful
life. This GAAP is known as:
monetary concept
matching
economic entity
going concern
none - ANSWER Matching
10.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
11.The quality that assumes that information is reasonably free from error is
relevant
, conservatism
understandability
consistency
none - ANSWER None - reliability
12.Preparing a production plan would be an example of:
tax accounting
managerial accounting
financial accounting
none of these - ANSWER Managerial accounting
13.Horizontal analysis compares the components of a balance sheet with a base
item. T/F - ANSWER False
14.Since companies have different numbers of shares outstanding, it is not
useful to compare earnings per share ratios. T/F - ANSWER True
15.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
