ENT CH 7

It is important to record and balance the company account on at least a _____ basis. Multiple choice question. monthly biannual daily yearly

monthly

( ) credit is a form of nonequity funding for physical assets as well as the actual supplies purchased. (Enter one word in the blank.)

supplier

1.) Cash Basis Accounting = 2.) Accrual Basis Accounting = matches- Choice a.) It recognizes expenses as they are paid and recognizes revenue as it is generated. Choice b.) It is the more typical form of accounting used, with expenses and revenues recorded when they actually occur, regardless of when the cash is received.

1-a 2-b

Which funding tool involves the leasing of equipment from manufacturers or a third-party reseller? Multiple choice question. Asset lease Factoring Bank loan Credit cards

Asset lease

What report creates a listing of all checks that have been written and all that have cleared through the bank? Multiple choice question. Accounts payable Petty cash register Expense account Check register

Check register

is a major source of nonequity financing and can come from banks, credit cards, or suppliers. Multiple choice question. Equity A venture Debt A grant

Debt

Which account should be used when there is an expense too small to write a check for or when a check is simply inappropriate? Multiple choice question. Credit card Expense account Petty cash register Accounts payable

Petty cash register

Which of the following are true regarding the accounts payable? (Check all that apply.) Multiple select question. The record should include date paid, amount paid, and check number or tracking number. All invoices received should be recorded. A record of payment toward each invoice should be included. A single record should be maintained for all creditors.

The record should include date paid, amount paid, and check number or tracking number. All invoices received should be recorded. A record of payment toward each invoice should be included.

An inventory record will include: (Check all that apply.) Multiple select question. an item number the quantity of the item a description of the item a unit and total cost the quality of the item

an item number the quantity of the item a description of the item a unit and total cost

Besides banks, finance companies, and friends and family, another source of nonequity loans comes from: Multiple choice question. crowdsourcing. the founders. business angels. venture capital.

the founders

True or false: Credit cards are a form of equity investment. True false question.TrueFalse

false

Suppliers will generally provide ( ) on both physical assets and the actual supplies purchased. (Enter one word in the blank.)

credit

When someone provides funding in return for some ownership in the new business, it is referred to as a(n) _____. Multiple choice question. equity investment crowdfund debt investment asset lease

equity investment

A(n) ______ is simply money designed to help the new business begin operations with no expectation of repayment. Multiple choice question. debt loan grant equity investment

grant

True or false: The founder should avoid personally lending money to the new business because it is an unsecured investment. True false question.TrueFalse

false

In the long run, the cost of capital for nonequity funding is generally ______ that of equity investment. Multiple choice question. less than more than equal to

less than

Which of the following is NOT a source of nonequity capital to start a business? (Check all that apply.) Multiple choice question. Asset leasing Venture capital Bank loans Supplier credit

Venture Capital

Inventory should be taken at scheduled times during the year and an exact match should be completed between: (Check all that apply.) Multiple select question. units sold shrinkage inventory ending inventory starting inventory

units sold ending inventory starting inventory

The new business should employ all ______ funding mechanisms available before seeking _____ funding. Multiple choice question. nonequity; equity equity; nonequity

nonequity; equity

Which accounting record tracks time for hourly workers and attendance for salaried employees? Multiple choice question. Payroll Expense Check register Accounts payable

Payroll

Which of the following are sources of nonequity capital to start a business? (Check all that apply.) Multiple select question. Grants Business angels Debt Venture capital

Grants Debt

What are the key financial issues involved with starting a business? (Check all that apply.) Multiple select question. The establishment of an investment portfolio The establishment of an accounting system The funding and the funding level of the firm The flow of information in the new business

The establishment of an accounting system The funding and the funding level of the firm The flow of information in the new business

Why are banks often quite restrictive in their lending to start-up firms? Multiple choice question. Funding requests are too low. Lack of collateral Excessive grant backing The risk is perceived to be too high.

The risk is perceived to be too high.

A(n) involves a contractual agreement whereby the business receives some amount of money that must be repaid over a specified period of time at a specified interest rate.

loan

Which of the following are considered sources of debt for starting a new business? (Check all that apply.) Multiple select question. Banks Angels Suppliers Credit cards

Banks Suppliers Credit Cards

Identify the characteristics of credit cards as a form of nonequity investment. (Check all that apply.) Multiple select question. They typically have a set upper limit. They are generally tied to a much higher interest rate than that of a bank loan. They usually have a set repayment schedule. They typically entitle one to revolving credit that is tied to a particular asset.

They typically have a set upper limit. They are generally tied to a much higher interest rate than that of a bank loan.

Grant funding typically comes from: (Check all that apply.) Multiple select question. a supplier. a nonprofit agency. credit companies. the government.

a nonprofit agency the government

Banks have traditionally been a major source of funds for: Multiple choice question. venture capitalists. start-up firms. business angels. established firms.

established firms

What are special funds that are neither equity or debt funds that are designed to aid businesses in specific areas? Multiple choice question. Venture capital Factors Grants Loans

grants

Which form of funding is used by a business to conserve cash and maintain the latest versions of whatever equipment is available? Multiple choice question. Credit cards Asset lease Crowdfunding Factoring

asset lease

Which of the following are true with regard to managing the flow of data in the context of businesses? (Check all that apply.) Multiple select question. Data are obtained in a timely manner. Data management is more important for large, established firms. Data measurement methods must be complex. Data are tied to the strategic needs of the business.

Data are obtained in a timely manner. Data are tied to the strategic needs of the business.

Which of the following are common forms of debt for a new business? (Check all that apply.) Multiple select question. Loans Credit cards Supplier credit Equity investors

Loans Credit cards Supplier credit

The three key issues involved with starting a business include the funding of the firm, the creation of an accounting system, and _________. Multiple choice question. the establishment of a sound credit rating the development of a credit system the development of an investment portfolio the flow of information in the new business

the flow of information in the new business

True or false: When considering funding, a firm needs to evaluate not only the amount provided but also the sources of that funding. True false question.TrueFalse

True

Which of the following items should be included on the payroll record? (Check all that apply.) Multiple select question. Base pay and overtime pay rate Taxes Benefit deductions Number of hours worked Insurance claims

base pay and overtime pay rate Taxes Benefit deductions Number of hours worked

Any form of capital infusion that must be paid back with interest is called ______. Multiple choice question. factoring debt equity grant

debt

What is the generic term used to describe any type of nonequity funding tied to the business? Multiple choice question. Loan Debt Equity Factoring

debt

True or false: There is no need to treat a loan from family as a contractual agreement. True false question.

false

Besides banks, finance companies, and the founders, another source of nonequity loans comes from: Multiple choice question. friends and family. factoring. business angels. venture capitalists.

friends and family.

Which of the following funding options traditionally involves selling a percentage of the business to an outside party? Multiple choice question. Equity investment Nonequity funding Grants Debt financing

Equity investment

Which account operates much like a bank savings account using a register to track the amount in the box? Multiple choice question. Accounts payable Petty cash register Expense account Cash register money

Petty cash register

A(n) ______ is like a master system for tracking the activity of the business. Multiple choice question. chart of accounts check register expense account petty cash register

chart of accounts

A(n). investment is funds received by a business in exchange for a percentage ownership of the business.

equity

A separate accounts ______ record should be maintained for each creditor. Multiple choice question. expense payable receivable factoring

payable

Identify the true statements about equity investment. Multiple select question. The founder must refrain from outlining what rights and expectations each investor has as the business grows. Equity investment requires an equivalent percentage of control be given to the investors. Equity investment involves selling a percentage of the business to an outside party. In the case of dissolution, each investor is entitled to the percentage of the break-up value equal to their investment percentage.

Equity investment involves selling a percentage of the business to an outside party. In the case of dissolution, each investor is entitled to the percentage of the break-up value equal to their investment percentage.

A chart of accounts is simply a listing of each type of activity and each type of asset within the company. Rank the categories of accounts from first to last associated with a chart of accounts. Instructions Expense Category Asset category Income category

Income Expense Asset

What method of inventory control seeks to minimize excess capital investment in inventory by having it present only shortly before it is used? Multiple choice question. Asset-based inventory Just-in-time inventory Equity-funded inventory Zero-based inventory

Just-in-time inventory

Which of the following typically issue grants? (Check all that apply.) Multiple select question. Banks and finance companies Suppliers Private foundations Government

Private foundations Government

Which of the following are true about loans as a source of funding for new businesses? (Check all that apply.) Multiple select question. They are equity funds that are organized as limited partnerships. They are the most common form of equity financing. They are often repaid monthly from cash flow. They are secured by assets or a personal guarantee.

They are often repaid monthly from cash flow. They are secured by assets or a personal guarantee.