Business Management Ch. 9 Quiz
Before you can approach a lender or investor about financing your business, you must prepare all of the following except
A personal cash flow statement
An income statement helps you do all of the following except
Anticipate when negative cash flows will occur so that you can plan for how to handle them
Items of value that you own are called
Assets
Depreciation is included on a balance sheet to show that some
Assets have lost value over time
The assets, liabilities, and owner's equity of a business are shown on a
Balance sheet
Posting generally done
Every one to two days
Which of the following is not one of the journals that businesses typically use to record their transaction
Expense journal
A bank usually will loan a business up to 50 percent of the total value of its accounts receivable if it feels that the business's customers are good credit risks.
False
A best-case-scenario cash flow statement should project the lowest cash receipts and highest cash disbursements that your business is likely to have
False
A business that collects sales tax must pay the tax quarterly
False
A business that has more assets than liabilities has negative net worth
False
A cash flow statement shows a business's revenues and expenses incurred over a period of time and the resulting profit or loss
False
An aging table is record keeping took for tracking accounts payable
False
An income statement shows revenues that you have received and expenses that you have paid
False
Banks require collateral for most unsecured loans
False
Debt capital is money invested in a business in return for a share in the profits of the business.
False
If you receive supplies today but pay for them later, you should record this transaction in the cash payments journal
False
Inventory is a type of fixed asset because it is used up in normal business operations
False
The cash flow statement is prepared using the accrual method of accounting
False
To calculate your net worth, you should prepare a pro forma financial statement.
False
On a balance sheet, buildings and furniture would be included as
Fixed assets
Under the cash method of accounting, revenue is recorded prior to receipt
Flase
The journal used to record any kind of transaction is the
General journal
The difference between revenue and cost of goods sold is called
Gross profit
An aging table shows a business
How long it is taking customers to pay their bills
An income statement indicates
How much money a business earns or loses over a period of time
A high debt-to-equity ratio
Indicates that a business is primarily financed through equity
A line of credit
Is a type of debt capital
In the accounting equation, assets must always equal
Liabilities plus owner's equity
A mortgage is a type of
Long-term liability
If a business wants to make improvements to increase profits, it will usually get a
Long-term loan
Venture capitalists are individuals or companies that
Make a living by investing in startup companies
A business must pay income taxes
Quarterly
A sales journal is used to record any kind of transaction is the
Sales of merchandise on account
A payroll register includes all of the following information except
Sales taxes deducted from an employee's earnings
Although similar to borrowing from the SBA, the restrictions are tighter for borrowing from
The Economic Development Association
An income statement is sometimes called a profit/loss statement
True
Deductions from the employee's earnings include federal, state, and local taxed and contributions for Social Security and Medicare
True
Equity capital does not include money invested by the owner of the business.
True
Interest earned from bank accounts is considered revenue
True
Loans and accounts payable are examples of liabilities
True
Net worth is the difference between items of value that you own and amounts you owe to others.
True
Payroll records show employee earnings and any deductions from those earnings
True
Subsidiary ledgers are commonly used for accounts payable and accounts receivable
True
The Small Business Administration (SBA) does not make direct loans
True
The cost of the inventory that a business sells during a particular period is called costs of goods sold
True
Typically, only very small businesses use the cash method of accounting
True
Venture capitalists are usually interested in companies that have the potential of earning hundreds of millions of dollars within a few years.
True
Your company's dept-to-equity ratio measures how much money a company can safely borrow over time.
True
Unsecured loans are
Usually short-term loans that have to be repaid within a year
If cash receipts total more than cash disbursements, your business has
a positive cash flow
A booklet in which you record the dates and amounts of the checks you have written is called an
check register
A bank may turn down a loan application of a new business because the entrepreneur
is investing too little of his or her own money in a business
The accrual method of accounting
is used by most companies because it offers a better picture of long-term profitability