BUSN 101 Exam
What is the fundamental acounting equation?
Assets = Liabilities + Owners' Equity
Match each item with the part of the financial statement to which it belongs. 1. Accounts Receivable - Balance Sheet - Income Statement - Statement of Cash Flow
Balance Sheet
Match each item with the part of the financial statement to which it belongs. 10. Owner's Equity - Balance Sheet - Income Statement - Statement of Cash Flow
Balance Sheet
Match each item with the part of the financial statement to which it belongs. 11. Patenets - Balance Sheet - Income Statement - Statement of Cash Flow
Balance Sheet
Match each item with the part of the financial statement to which it belongs. 7. Land - Balance Sheet - Income Statement - Statement of Cash Flow
Balance Sheet
Match each item with the part of the financial statement to which it belongs. 8. Long-term Liabilities - Balance Sheet - Income Statement - Statement of Cash Flow
Balance Sheet
Match each item with the part of the financial statement to which it belongs. 12. Revenues - Balance Sheet - Income Statement - Statement of Cash Flow
Income Statement
Match each item with the part of the financial statement to which it belongs. 2. Advertising Expense - Balance Sheet - Income Statement - Statement of Cash Flow
Income Statement
Match each item with the part of the financial statement to which it belongs. 4. Cost of Goods Sold - Balance Sheet - Income Statement - Statement of Cash Flow
Income Statement
Match each item with the part of the financial statement to which it belongs. 5. Income Tax - Balance Sheet - Income Statement - Statement of Cash Flow
Income Statement
Match each item with the part of the financial statement to which it belongs. 6. Insurance Expense - Balance Sheet - Income Statement - Statement of Cash Flow
Income Statement
Corporate structure in which investors have limited liability; similar to S corporations without eligibility requirements
LLC
Smile Dental: Dr. Berry decided to open a dental office on his own. He wanted his personal assets protected in case of malpractice but didn't want the hassle that comes along with traditional incorporating
LLC
Match each item with the part of the financial statement to which it belongs. 3. Cash Balance - Balance Sheet - Income Statement - Statement of Cash Flow
Statement of Cash Flow
Match each item with the part of the financial statement to which it belongs. 9. Net Change in Cash - Balance Sheet - Income Statement - Statement of Cash Flow
Statement of Cash Flow
A sequence of procedure repeated in the same order from the point of the transaction to its appearance in the financial statements
accounting cycle
Money owed by a company to its suppliers and/or vendors for products or services purchased on credit
accounts payable
Dividends Advantage or Disadvantage of Issuing Stock?
advantage
Future buy back Advantage or Disadvantage of Issuing Stock?
advantage
Repaid Advantage or Disadvantage of Issuing Stock?
advantage
Abigayle has recently started her business as a sole proprietorship. All she did to get started was post an announcement in the local paper and obtain all the appropriate local licenses. Advantage or Disadvantage?
advantage of a sole proprietorship
Hunter has just completed his first year of operation as a sole proprietor of a successful sporting goods store. There were challenges but he was excited about getting to keep all the profits of the venture to himself. Advantage or Disadvantage?
advantage of a sole proprietorship
Jordan has just completed his first year of operation as a sole proprietor of a successful marketing firm. Realizing a significant profit, he is happy that he does not have to worry about double taxation of his earnings. Advantage or Disadvantage?
advantage of a sole proprietorship
If one owner of a partnership makes a bad decision that ends up in the business being sued, then
all partners face unlimited liability
An audited document required by the SEC containing financial information and provided to shareholders at the end of the year
annual report
Financial statement that shows the financial position of a company on a specific date
balance sheet
A debt investment in which an investor loans money to a corporation or government entity for a specific period of time at a fixed interest rate
bonds
long-term debt owed by a company to investors who have purchased bonds
bonds payable
Debt financing is essentially
borrowing money
An estimation of revenue and expenses over a specified future time period
budget
A plan to finance long-term assets such as plant, machinery, and equipment
capital budget
The purchase of major assets for a business can be found on which budget?
capital budget
Funds used to acquire or upgrade assets such as land, buildings, machinery, and equipment
capital expenditure
The amount by which the selling price of an asset exceeds the purchase price
capital gains
A financial plan that summarizes estimated cash receipts and disbursements for a period of time
cash budget
A measure of a company's financial health found by calculating the difference between cash receipts and cash payments
cash flow
Bond with a 100-year maturity date
century bond
Unsecured promissory note issued by a corporatio or bank with a short maturity date
commercial paper
Securities that represent equity ownership in a corporation
common stock
Merger between two or more companies that are involved in totally unrelated business activities
conglomerate merger
RST Inc.: A group of colleagues opened a paintball arena. They wanted to limit the liability of the owners so the investors didn't encounter any personal losses. Additionally, they wanted those who helped with the start-up costs to have a share of the profits.
corporation
The expected rates of return for the different types of capital used to finance the business
cost of capital
The costs of obtaining raw materials and all parts involved in producing the finished goods sold to consumers
cost of goods
A balance sheet account combining assets that are expected to be converted to cash within a year
current assets
A debt instrument not secured by collateral
debenture bond
Bonds that are not backed by specific collateral
debenture bonds
A method of financing in which a company recieves a loan, issues bonds and recieves trade credit, and promises to repay it
debt financing
Noncash expense that reduces the value of an asset over a prescribed period of time due to wear and tear, age, or obsolescence.
depreciation
Net profit after taxes Advantage or Disadvantage of Issuing Stock?
disadvantage
One vote per share Advantage or Disadvantage of Issuing Stock?
disadvantage
Shareholders Advantage or Disadvantage of Issuing Stock?
disadvantage
Ethan is married with four kids. He has a mortgage, a car payment, and several other bills. He has thought about starting a small business. He's excited about the potential of his business ideas, but he's also concerned about the risk of personal losses associated with starting his business as a sole proprietorship. Advantage or Disadvantage?
disadvantage of a sole proprietorship
Laura has owned her business for approximately one year. During this year, she has realized that she underestimated how much time running her small business would take. On average, she works 80 hours per week. Advantage or Disadvantage?
disadvantage of a sole proprietorship
LuAnn has owned her small business for three years as a sole proprietorship. The business has grown during those three years. LuAnn realizes she needs additional funds, but the funds available to the business are limited to what she can gather alone. Advantage or Disadvantage?
disadvantage of a sole proprietorship
An investment technique that mixes a variety of stocks, bonds, and other secutiries to minimize risk
diversification
The distribution of a portion of a company's profits to common and preferred shareholders
dividends
An accounting technique that records financial information as both a debit and a credit
double-entry
A method of financing in which a company issues shares of its stock, reinvests company earnings, or obtains funds from venture capitalists
equity financing
A financing method in which a business sells accounts receivable at a discount to raise funds
factoring
The business function that involves raising and managing funds
finance
The policies and procedures established by an organization for managing, documenting, and reporting costs and expenses
financial control
Planning, organizing, directing, and controlling the financial resources of a firm
financial management
Just as blood pressure, weight, height, and cholesterol numbers can help a doctor determine the overall health of a person, the ____________ can help a business owner understand the health of the business.
financial statements
The balance sheet, income statement, and statement of cash flow are the
financial statements
Tangible property that a firm owns and does not convert quickly into cash
fixed assets
The prediction of how money will come into the business and flow out of a business is the essential concept involved in
forecasting
The three key component of financial planning include
forecasting, budgeting, and control
The party that buys the right to use a business's products, brand, business format, trade secrets, and so on
franchisee
The party that sells to another parts the rights to use its business format, proprietary knowledge, products, and so on
franchisor
Business entity with two or more owners who own and operate the business and assume unlimited liability
general partnership
The difference between revenue from the sale of goods and the costs related to producing those goods
gross profit
Joining of two or more companies in the same industry and/or with similar product lines
horizontal merger
A financial statement that summarizes a firm's performance and indicates the profitabiltiy (or loss) over a period of time
income statement
An agreement between a lender and borrower that details specific terms of a bond such as maturity date and interest rate
indenture terms
An examination of a firm's financial statements done by a certified public accountant (CPA) who is not an employee of the firm
independent audit
The initial sale of a stock to the public by a private company
initial public offering (IPO)
Nonmonetary assets that cannot be seen, touched, or physically measured
intangible assets
Bonds have to be paid back plus
interest
The payment the bond issuer makes to the bondholder to compensate them for the use of their money
interest
A banker who deals primarily in underwriting new securities
investment banker
Celeste is planning out when the firm will pay its bond payment Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Jesse is in the process of estimating the revenues and expenses for the next quarter Job of a financial manager or Not a job of a financial manager?
job of a financial manager
John is seeking alternate and creative ways to pay the firm's bills Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Karla is determining if the finances of the company are correct and in order Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Neil is analyzing the funds for the organization and determining whether bonuses should be paid out to employees Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Nick is evaluating some different options to help the company secure funding for a major equipment purchase Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Steve is looking for strategies that would help the firm reduce its taxes Job of a financial manager or Not a job of a financial manager?
job of a financial manager
Tim is giving top management his opinion on financial matters that will impact the firm Job of a financial manager or Not a job of a financial manager?
job of a financial manager
The accounting book in which transactions are listed in seperate accounts
ledger
The degree to which a business uses borrowed money to finance production and growth
leverage
A company's debts or obligations that come about during the course of business operations
liabilities
Unsecured credit extended to a borrower by a bank or vendor for a specific time period
line of credit
The ability of an asset to be converted into cash quickly without any impact on the price of the asset
liquidity
The branch of accounting that measures, analyzes, and communicates information about a company's operations to internal managers to aid their decision making
managerial accounting
The date on which an obligation, such as a bond, must be repaid in full
maturity date
The exact date the issuer of a bond must pay the principal to the bondholder
maturity date
A professionally managed, diversified investment vehicle funded by many investors for the purpose of investing in stocks, bonds, and other assets
mutual fund
What concept does the balance sheet really explain, based on the information contained in it?
net worth
Jane is developing new market strategies to increase sales in the Southwest region of Italy Job of a financial manager or Not a job of a financial manager?
not a job of a financial manager
Jason is preparing the financial statements for the fourth quarter Job of a financial manager or Not a job of a financial manager?
not a job of a financial manager
Laynah is researching an alternative to warehousing by using a JIT inventory system Job of a financial manager or Not a job of a financial manager?
not a job of a financial manager
Tony is conducting a team-building workshop Job of a financial manager or Not a job of a financial manager?
not a job of a financial manager
Short- or long-term obligations to banks or other creditors based on formal written agreements
notes payable
A forecast of estimated income, expenses, and revenue for a given period of time
operating budget
Expenses incurred as a result of normal business activites in an organization but not directly associated with production
operating expenses
A market maintained by securities dealers for the purpose of selling securities not listed on a stock exchange
over-the-counter (OTC) market
Magic City Ice Cream: Scott, with expertise in marketing and sales, and Stacy, with experience in management, opened an ice cream parlor together. They share the profits and responsibilities equally.
partnership
The face value (dollar value) of a bond
principal
The income statement shows
profit or loss over a given period of time
A document signed by a borrower promising to repay a loan at a specific date or predetermined terms
promissory note
A formal written document filed with the Securities and Exchange COmmission (SEC) to sell securities that describes the plan for a business
prospectus
Source documents would include items such as
receipts, travel records, etc.
Line of credit where, for a fee, a customer can borrow up to a preapproved amount adn use funds as needed
resolving credit
Earning reinvested in the business or used to pay off debt
retained earnings
25-year General Electric bond Wedding or Retirement?
retirement
60-month Treasury note Wedding or Retirement?
retirement
DOW ETF Wedding or Retirement?
retirement
Energy sector mutual fund Wedding or Retirement?
retirement
Johnson & Johnson stock Wedding or Retirement?
retirement
The income a company receives from its main business activities during a specific period of time
revenue
A debt instrument backed by collateral
secured bond
A loan agreement where assets are pledged by the borrower to decrease the risk for the lender
secured loan
If a corporation is formed, then the owners are known as
shareholders
In general, forecasts and budgets that are 12 months or less in time are called
short-term
A form of financing with payment due in one year or less
short-term finance
A fund in which a company sets aside money to enable it to repay bonds on the bond's maturity date
sinking fund
A reserve account to ensure enough money will be available to pay bondholders on the bond's maturity date
sinking fund
Taylor Marketing: Taylor began a marketing consultant business on her own. The risk is minimal and there is no need for additional start-up capital.
sole proprietorship
Securities that represent ownership in a corporation with owners having a claim in the corporation's assets and earnings
stock
A market in which securities are bought and sold
stock exchange
A corporate decision to divide a company's exisiting shares into multiple shares
stock split
The financial statement that is most likely to be used to determine if a business is able to meet its short-term obligations within the next month would be
the cash flow statement
When the real dollar figures are known and then these figures are comapred to what was budgeted, this process is called?
the financial control process
An arrangement to buy goods or services on account with payment due at a later date
trade credit
An informal accounting schedule that lists general ledger account balances at a point in time
trial balance
Full responsibility to pay the debts or obligations of a legal entity
unlimited liability
If a sole proprietor is found negligent of an action, then that person could face
unlimited liability
A loan agreement that is not backed by assets of the borrower
unsecured loan
Money provided by private investors to startup firms that are believed to have growth potential
venture capital
Joining of two or more companies in similar industries but in different stages or steps of the manufacturing process
vertical merger
Stockholders are entitled to
vote(s) for the board of directors
18-month General Electric bond Wedding or Retirement?
wedding
24-month certificate of deposit (CD) Wedding or Retirement?
wedding
Money market shares Wedding or Retirement?
wedding
Savings account Wedding or Retirement?
wedding
Short-term junk bonds Wedding or Retirement?
wedding