Busn. exam 2 - laplante brcc
a sole proprietorship is a form of business ownership in which:
a single owner actively manages the company
in the context of opportunities and threats, overhead costs for small businesses
are often lower than big companies
________________________ measure how effectively an organization uses its resources to generate net income
asset management ratios
the _____________ measures how long it takes for a firm to receive payment from customers who buy on credit
average collections period
the three kinds of financial statements that are prepared in financial accounting are
balance sheet, income statement, and statement of cash flow
in the context of the various strategies that can help a small business owner succeed a _____________ provides an invaluable way to keep an entrepreneur and his or her team focused on success; it is also absolutely crucial for obtaining outside funding
business plan
a firm's ____________ refers to its holdings of currency plus demand deposits
cash
________________________ are very safe and highly liquid assets that can be converted into cash quickly and easily
cash equivalents
through the establishment of a set of generally accepted accounting principles (GAAP) the financial accounting standards board (FASB) aims to ensure that financial statements are
comparable
The basic rules governing how a corporation is organized and how it conducts its business is known as
corporate bylaws
the _______________________ is a common measure of leverage that compares liabilities to assets
debt ratio
One drawback of offering liberal credit to customers is that it can:
delay the receipt of cash that the firm needs to meet its financial obligations
a ______________________ is a type of franchising arrangement in which the franchisor makes a product and licenses the franchise to sell it
distributorship
in the context of the statement of retained earnings, any change in retained earnings is found by subtracting
dividends paid to shareholders from net income
leverage ratios measures the extent to which a firm uses
financial leverage
financial managers use _____________________ to assess the financial strengths and weaknesses of their firm
financial ratio analysis
a _________________ is one that is not based on a single assumed level of sales and enables managers to make meaningful comparisons between actual cost and budgeted costs
flexible budget
in the context of financial statements of a company, cash flow statements commonly begin with
net income
a ___________________________ cannot distribute dividends to its members
not - for - profit corporation
in the context of funding options for small businesses, which of the following offers a potential funding source for new business start - ups?
peer - to - peer lending
which of the following is a disadvantage associated with sole proprietorship?
raising money to finance growth can be tough for business owners
one of the major sources of equity financing for corporations is
retained earnings
all owners of a _________________ can actively participate in management while still having limited liability
statutory close corporation
an owner of a c corporation is called a
stockholder
in the context of an acquisition, the firm that is purchased by another firm is called the
target firm
which of the following is true of balance sheets?
the balance sheets of different firms vary in specifics
in the context of accounting, which of the following best defines cost?
the value of what is given up in exchange for something else
in the context of small business opportunities what is true of market niches?
they tend to be quite attractive to small firms
a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period
budgeting
in the context of balance sheets, the accounting equation tells us that the value of a firm's assets must be
equal to the AMT of financing provided by owners plus the AMT provided by creditors to purchase those assets
___________________ indicate the cash a firm spends or other assets it uses up, to carry out the business activated necessary to generate its revenue
expenses
which of the following would most likely be a question asked by stockholders of a firm?
has the management generated a strong enough return on their investment?
which of the following is a drawback of buying a franchise?
if the national brand suffers, so does the business
in the context of balance sheets, patents, trademarks, and copyrights are examples of
intangible assets
in addition to contributions from owners, firms can also raise long term funds by
issuing bonds
what is true of the board of directors of a corporation?
it establishes the corporation's mission
which of the following statements is true of the board of directors of a corporation?
it establishes the corporation's mission
most likely true of a company that relies mainly on equity financing
it forgoes the opportunity to use financial leverage
which of the following statements is true of a socially responsible firm?
it has an obligation to respect the needs of all stakeholders
in the context of franchising what is true of a business format franchise?
it is an agreement in which franchisor grants the franchise the right to both make and sell its goods or services
which of the following statements is true of trade credit?
it is granted supplies after evaluating the CREDITWORTHINESS of a firm
in the context of the capital structure of a firm what is true of equity financing?
it is less risky than debt financing
which of the following is true of accumulated depreciation?
it is the decrease in the value of assets such as machinery, equipment, and property over time
which of the following is a disadvantage of starting a business from scratch?
it takes sheer sweat equity to build a customer base
which of the following is a challenge faced by a franchisor?
keeping all franchises satisfied
which of the following is true of large corporations
large corporations with publicly traded stock must provide an annual report containing financial statements to all stockholders
a form of business ownership that offers both restricted responsibility to its owners and flexible tax treatments
limited liability co
ratios that measure the rate of return a firm is earning on various measures of investment
profitability ratios
which of the following is an advantage of debt financing?
the interest payments a firm makes on debt are a tax - deductible expense
Buying an established business is a better plan than starting your business from scratch because:
the organizational structure is in the place