Chapter 14 - Practice Quiz

Financial management requires that you have some method to measure and compare your financial position and financial results. Your financial position is reflected on your ________, your financial results on your ________. master budget; return on investment balance sheet; income statement return on investment; master budget income statement; balance sheet

balance sheet; income statement

A business that collects, collates, and reports information concerning an entity's use of debt is referred to as a(n) accelerator. credit reporting agency. debt reporting organization. community development organization.

credit reporting agency.

When a business enters a phase of rapid growth, one of the challenges it faces is that very few sources of money are available to support its growth. true false

false

When financing with debt, small businesses should first apply for a Small Business Administration guaranteed loan before approaching their own bank as the SBA loans have lower interest rates. true false

false

________ ratios measure the relative risk that a business setback could cause bankruptcy. Liquidity Gross margin Leverage Profitability

Leverage

________ ratios measure management effectiveness in creating wealth from sales and from invested funds. Liquidity Activity Leverage Profitability

Profitability

An organization authorized by the SBA to make insured loans to small businesses that are expected to increase economic activity within a specific geographic area is referred to as a(n) community development organization. accelerator. economic cooperation organization. limited partnership.

community development organization.

A company's goodwill is its best collateral. true false

false

Uncertainty of returns in a business is referred to as financial risk. accelerated cash-out. overpayment. collateral.

financial risk.

Gifts of money made to a business for a specific purpose are referred to as equities. debts. tax credits. grants.

grants

Which of the following ratios measures the percentage of sales revenue available to pay operating costs and to provide profits after paying for inventory? gross margin ratio profit margin ratio quick ratio debt to assets ratio

gross margin ratio

When debt increases as a percentage of total investment, returns on equity increase at a decreasing rate. decrease at an accelerated rate. increase at an accelerated rate. decrease at a decreasing rate.

increase at a decreasing rate.

Private businesses that are authorized to make SBA insured loans to start-ups and small businesses are called community development organizations. accelerators. small business investment companies. LLCs.

small business investment companies.

Direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria are referred to as tax abatements. grants. tax credits. debts.

tax credits.

Equifax is one of the four primary CRAs in the United States. true false

true

Giving a gift has tax implications. true false

true

Which of the following describes angel investors? wealthy individuals who invest in companies in relatively early stages of development individuals who act as brokers to help connect owners to organizations that provide funding state-run organizations that buy stakes in companies in the early stages of development government organizations that help small-scale companies grow

wealthy individuals who invest in companies in relatively early stages of development

________ is money from selling part of a business to people who are not and will not be involved in the management of the business. A dividend A bond Equity capital Outside equity

Outside equity

Something of value given or pledged as security for payment of a loan is called chargeback. capital equity. collateral. personal equity.

collateral

A legal "artificial" entity that is formed by filing specific documents with a state government is called a sole proprietorship. partnership. corporation. general partnership.

corporation

Which of the following is a form of personal gift? tax credits free use grants tax abatements

free use