Module 5: Finance

A(n) _____ combines a purchases budget and a cost of goods sold budget.

inventory budget

An asset that is acquired for the purpose of either generating future incomes and cash flows or appreciating in value to provide an increase in future wealth is called a(n) .

investment

Which of the following is an example of a variable cost? (Check all that apply.)

product shipping sales commissions raw materials

Percentage discounts from gross invoice amounts provided to encourage prompt customer payment is called ______.

trade discounts

Gift capital can be termed as capital resources that neither provide any ownership nor require any repayment to the giver.

true

The bank knows the amount of any checks that were returned because of nonsufficient funds (NSF).

true

True or false: Timing purchases is a technique that can provide a business with extra time to pay a bill for inventory, equipment, or services.

true

Managerial accounting is

used by managers for planning, directing, and controlling a business.

True or false: Small online businesses that have very little cost of labor are mandated to show labor as a separate amount.

false

Those costs that remain constant regardless of quantity of output are called ______.

fixed

A business' ability to manage cash flows in such a manner that the company can respond appropriately to unexpected opportunities and needs is called financial ______.

flexibility

Operating activities are

activities involved in producing and selling goods and services.

A ______ budget is a schedule of the amounts and timings of the receipt of cash into a business.

cash receipts

Accounts receivable

Shows records of credit given to customers

A statement of the sources and uses of cash in a business for a specific period of time is known as the ______.

cash flow statement

A reduction in a merchant's bank account by a credit card company is called a(n) ______.

charge back

Notes issued by creditworthy corporations are called ______.

commercial paper

A(n) ______ is 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.

community development organization

A ______ is a legal "artificial" entity that is formed by filling specific documents with a state government.

corporation

A business that collects, organizes, and details data concerning an entity's use of debt is referred to as a _____.

credit reporting agency (CRA)

The bills and coins printed by governments to represent money are called ______.

currency

A community development organization is

an SBA organization that is authorized to make insured loans to small businesses that are expected to increase economic activity in an area.

______ risk is the uncertainty of returns and losing money.

Financial

The basic accounting concept that assets equal liabilities plus owners' equity is known as the ______.

accounting equation

Investing activities

are the purchase and sale of land, buildings, equipment, and securities.

______ are/is money that is immediately available to be spent.

cash

The is a schedule of the amounts and timings of payments of money out of a business.

cash disbursements budget

Borrowing money secured by a firm's accounts receivable is called receivables.

factoring

The standardized rules for accounting procedures set out by the Financial Accounting Standards Board (FASB) and used in all audits and submissions of accounting reports to the government are known as _____.

generally accepted accounting principles

______ accounting is used by managers for planning, directing, and controlling a business.

Managerial

Revenue is

an increase in owners' equity caused by selling a product or service.

A reduction in the sales price provided to credit customers for paying outstanding amounts in a timely manner is referred to as a for prompt payment.

discount

A decrease in owners' equity caused by consuming a business' product or service is called a(n) ______.

expense

Which of the following are the broad categories of financial ratios? (Check all that apply.)

Liquidity ratios Activity ratios Leverage ratios Profitability ratios

The ______ balance is the sum of money that has actually been received and paid out of a depositor's account.

bank available

The difference between the existing value of cash inflows and the existing value of cash outflows over a specified period of time is called _____.

net present value

Rewards that do not require payments of cash are called incentives.

noncash

Amounts that are owed to vendors for merchandise or services purchased on credit are known as ______.

payables

True or false: An advantage of borrowing money for capital investment is that borrowing permits the owners to keep a higher level of control of the business.

True

True or false: An appropriate accounting system records details of financial dealings that ease the task of verifying business conduct.

True

True or false: The common financial statements provide business owners with information to help make informed decisions regarding a firm's operations and overall financial health.

True

A ______ form of business ownership is two or more people cooperating to conduct a business enterprise.

partnership

The accounts of assets, liabilities, and owners' equity, excluding accounts for revenues and expenses, are called _____.

permanent accounts

Wealthy individuals who invest in companies in relatively early stages of their development are called ______.

angel investors

An entity that processes check and electronic fund transfers for banks and other financial organizations is called a ______.

clearinghouse

Something of value given or pledged as security for payment of a loan is called ______.

collateral

The sum of the cash inflows and outflows recorded in a firm's accounting records is the ______ balance.

company book

______ is a measure of how quickly a company can raise money through internal sources by converting assets to cash.

liquidity

_____ are known to charge back a sale amount in order to remove it from a business's account if situations such as fraud or customer challenge arise.

Credit card clearing services

Which of the following is true of royalty financing?

It involves an investor providing funds to a business for a contractual percentage of the revenues of the firm for a contractual period.

A(n) ______ is an SBA-approved partner that offers SBA-guaranteed loans of under $50,000 to eligible small businesses.

microlender

Which of the following statements regarding trade discounts are correct? (Check all that apply.)

These discounts are given by suppliers and vendors to encourage customer to pay on time. One should compare the annual effective interest rate of the discount to the cost of borrowing from other sources. The rule of thumb for a trade discount is 1% or greater if the billing period is less than 30 days.

Which of the following are true of progress payments? (Check all that apply.)

They are received from customers. They are quite commonplace in the construction industry.

An accounting statement of what a business owns, what it owes to others, and how much value the owners have invested in it is known as a(n) ______.

balance sheet

The ______ balance is the sum of deposits and withdrawals recorded in a bank's accounting records.

bank ledger

Which of the following statements is true of an account?

It is a record of similar transactions.

Which of the following statements regarding the current ratio are correct? (Check all that apply.)

It is calculated by dividing current assets by current liabilities. It is the most common ratio to estimate a business' liquidity. The rule of thumb for evaluating current ratio is that the minimum acceptable ratio is 2.0.

Which of the following formulas is used in a purchases budget to produce most of the schedules of a master budget?

Amount to be bought = Amount to be used + Desired ending amount - Beginning amount

Which of the following is implied by the going concern concept?

As a separate unit, a business may continue even if it is bought by another owner.

______ is a measure of the amount of debt relative to total investment.

Financial leverage

Which of the following is a benefit of using outside equity?

Outside investors often bring new ideas, processes, and procedures to existing businesses.

Identify a strategy for maximizing the value of a business's employees.

Use of contractors

Which of the following elements are likely to be included under the recurring payments section of a cash flow report? (Check all that apply.)

Wages Rent

The ___ identifies when, how, and why cash is expected to coming into a business, and when, how, and why it is expected to leave.

cash budget

Payables are

amounts that are owed to vendors for merchandise or services purchased on credit.

Which of the following are noncash incentives?

Time off Stock options Praise Extra vacation days

Aspects within a business that could change the business's costs are called .

internal factors

Which of the following statements describing a business that is financially flexible are correct? (Check all that apply.)

The business has the ability to increase efficiency and lower operation costs. The business is able to sell nonoperating assets. The business has the ability to obtain loans or sell additional stock.

Which of the following is a strategy for maximizing the value of business's employees? (Check all that apply.)

Use overtime for times of temporary increased business. Hire student interns, as they often are talented, motivated, and cost less than other employees.

Which of the following statements regarding factoring receivables are correct?

The factor usually lends between 75% and 80% of the value of accounts receivable. A factor charges a fee of around 5% of the amount. Factoring a business' receivables is considered one of the more expensive financing methods.

A financial plan for the future based on a single level of operations is called a ______.

budget

Financial risk is

the uncertainty of returns and the probability of losing money.

The difference between an actual and budgeted revenue or cost is called the ______.

variance

The ______ is a statement that lists revenues and expenses and shows the amount of profit a business makes for a specified period of time.

income statement

In the context of net present value (NPV) analysis, which of the following is a true statement?

Only cash flows are considered to perform NPV analysis.

______ equity is money from selling part of the business to people who are not and will not be involved in the management of business.

Outside

Which of the following are true of permanent accounts? (Check all that apply.)

Permanent accounts are kept in balance at all times. Assets, liabilities, and owners' equity are examples of permanent accounts.

Which of the following is one of the common financial statements? (Check all that apply.)

Balance sheet Cash flow statement Income statement Statement of retained earnings Statement of owners' equity

Identify an important consideration when giving a gift to help someone start or continue their business.

Consider nonvoting stock, if the gift is an equity investment.

Which of the following transactions go through a clearinghouse? (Check all that apply.)

Electronic transfers checks drafts

Identify an advantage of borrowing money for capital investment.

It improves the potential for greater rates of return for business owners.

Which of the following statements regarding commercial paper are correct? (Check all that apply.)

It is issued to be paid to the bearer. It is considered short-term financing. A company has to have good credit.

Which of the following statements regarding secured debt are correct? (Check all that apply.)

It is the debt that is secured by specific assets that can be seized for nonpayment. Commercial banks and credit unions make secured loans. Asset loans are usually secured by large assets like automobiles, machinery, and other equipment.

The purpose of an inventory budget is to _____.

simplify the budget process

Generally accepted accounting principles

are standardized rules for accounting procedures set out by the FASB and used in all audits, and submissions of accounting reports to the government.

Which of the following reasons account for discrepancies in a bank depositor's bank ledger balance and the actual value of cash held by the bank?

Delayed collection of deposits Delayed cash transfers

Which of the following methodologies help reduce the trouble of selecting from among investment options? (Check all that apply.)

Differential revenues and expenses Net present value analysis

In the context of the labor budget, which of the following steps are included in predicting labor costs when they vary with the output amount? (Check all that apply.)

Multiplying the labor cost per unit with the number of units produced Estimating the amount of labor required to produce each unit

Which of the following statements regarding demand deposits are correct? (Check all that apply.)

Owners may withdraw money on demand by using a check, draft, currency, or electronic transfer. Checking and savings accounts are the two most common forms of demand deposits. Demand deposits make up most of the noncurrency cash.

Which of the following statements about tax credits are correct? (Check all that apply.)

They reduce amount of taxes that a business will pay. They may be provided by federal, state, ore even local governments. They are used to encourage investment in specific types of assets, economic activities, or other purposes.

Which of the following statements about cash flow statements are correct? (Check all that apply.)

It reports cash inflows called receipts and outflows known as payments for a specific period of time. Business owners should create cash flow statements that are developed from the business' cash records. Operating, investing, and financing activities are the three most common activities the cash flow statement reports.

The ability of a business to survive adverse financial events is referred to as a business' ______.

financial strength

Liquidity is

a measure of how quickly a company can raise money through internal sources by converting assets to cash.

Something that a business owns and that is expected to have economic value in the future is known as _____.

assets

The ______ concept is a concept that a business has an existence separate from that of its owners.

business entity

Aspects of the world outside a business that could change the business's costs are called .

external factors

Which of the following tasks should an accounting system easily and efficiently accomplish? (Check all that apply.)

Enabling an exhaustive context-sensitive help function Aiding in the development of a cash budget

Identify the true statements about the Modified Accelerated Cost Recovery System (MACRS). (Check all that apply.)

It is set by the Internal Revenue Service. It allows taxpayers to depreciate more of a cost earlier in the life of a capital expense.

Which of the following statements about the balance sheet are correct? (Check all that apply.)

It provides information on current and long-term assets and liabilities. It presents a snapshot of a business' financial holdings and liabilities at the close of business on a specified date. It is also called the statement of financial position.

Identify the reasons that bootstrapping is common among small business start-ups. (Check all that apply.)

Business owners usually do not want to share ownership. External equity capital is not accessible for a majority of small business start-ups.

______ is the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold.

Consignment

An easy and effective accounting system helps a firm maintain an internal "_____" that records all entries and modifications to the accounting system to allow errors to be identified and corrected.

audit trail

Which of the following are one of the Four Cs of borrowing? (Check all that apply.)

Capacity of the business to repay the loan. Conditions of the industry and economy in which the business operates. Character of the business' owners. Collateral that can be used to secure the loan.

Which of the following statements regarding profitability are correct? (Check all that apply.)

Cash flows from operations that have been consistent indicate that the business can reliably convert profits to cash. Profitability is a primary measure of the business' capacity to repay loans. The business' capacity to earn profits is the most single factor for being able to borrow significant amounts of money.

Which of the following statements regarding currency are correct? (Check all that apply.)

Currency consists of both bills and coins. More than half of U.S. currency is held outside the U.S. According to the Federal Reserve, there is $1.7 trillion in circulation as of January 31, 2019.

True or false: Dividends are a charge for the use of money and is usually calculated as a percentage of the principal.

False

Which of the following statements about the balance sheet are correct? (Check all that apply.)

It contains a business' assets, liabilities, and equity. This statement is called a balance sheet because of accounting equation must balance. It is a statement of what a business owns, owes, and the value that the owners have invested in it.

Which of the following statements regarding the cash budget are correct?

It is the key to cash planning for small businesses. All business budgeting begins with a forecast of sales. Business owners estimate expected incomes and expenses and when these transactions will occur in order to create the cash budget.

Which of the following is one of the five primary criteria for a small business' recording-keeping system? (Check all that apply.)

Its data must be secure. It should be simple to use. Its reports must be timely. It must assure that the details are accurate. It must be understandable to the manager.

In the context of a cash disbursements budget, which of the following factors are combined to predict the amount and timing of cash discharge? (Check all that apply.)

Knowledge of payment patterns Estimate of expenses

Which of the following statements regarding marketable securities are correct?

Marketable securities are bought and sold on major exchanges, such as the NASDAQ. Government issued debts in the form of bonds, notes, and bills are marketable securities. They represent either ownership or debt of publicly held firms.

In the context of collecting receivables, which of the following should a firm owner keep in mind when giving credit to a customer? (Check all that apply.)

Establishing credit terms Implementing a late fee or penalty if the due date is missed

Which of the following are the most common means by which employees steal cash from their employers? (Check all that apply.)

Skimming Phony disbursements Larceny and embezzlement

Which of the following statements regarding outside equity are correct? (Check all that apply.)

It is called equity, because the investors have legal ownership rights to the business. People who buy ownership rights in a business are considered outside equity investors. These individuals are called investors, since they are lettering a business owner use their money now in order to get wealth in the future. They are said to be outside, since they are not part of the business' management.

Which of the following statements about the business entity concept are correct? (Check all that apply.)

It is implicit in all business regulation. It underlies the legal forms of establishing businesses such as corporations, limited partnerships, and limited liability companies. It makes it possible to separate business and personal transactions.

Which of the following statements about the income statement are correct? (Check all that apply.)

Revenues - Expenses = Net Income. The single-step and multiple step are two formats commonly used for creating an income statement. It is the primary source of information about a business' profitability.

Which of the following statements regarding cost of capital is true?

The lower the cost of capital of a business, the more profits the owner can keep for himself of herself.

Which of the following statements regarding borrowing are correct? (Check all that apply.)

The owner is not separated from the business, in fact the business is considered an extension of the owner. The owner's character is an important lending criteria and it is judges by his or her personal credit rating. No matter the form of business, the lender makes the loan to the owner, not the business.

Cash payments received before a product is completed or delivered are called _____.

deposit and progress payments

Regular and systematic reduction in income that transfers asset value to expense over time is called _____.

depreciation

A corporation is a

legal "artificial" entity that is formed by filling specific documents with a state government.

Which of the following statements about barter are correct? (Check all that apply.)

Barter alleviates the need for cash through trading goods and/or services. It is widely practiced in the U.S. by small businesses. Some like-kind transactions for goods or services are not subject to Federal tax.

Which of the following statements regarding bootstrapping are correct? (Check all that apply.)

Business owners often use their own capital and the funds generated by operating the business to finance the business' start-up and growth. The majority of small business start-ups are funding by bootstrapping. Studies report that between 90 and 95% of start-up business are initially funded through bootstrapping.

Which of the following statements about reconciling bank balances with a business' book balances are correct? (Check all that apply.)

Businesses should bank where online access to account information that is continuously updated is offered. The owner should reconcile company book balances with bank balances to avoid cash flow problems. Service charges, direct customer payments, interest received or charged, and returned checks will affect the bank balance.

Which of the following is a purpose for money? (Check all that apply.)

Keep track of wealth. Measure the value of tangible and intangible things. Facilitate exchange of unlike assets.

Which of the following are cash flow problems faced by many small businesses? (Check all that apply.)

Money coming into the businesses is too little. Money going out of the businesses is quite a lot.

Which of the following are important considerations when giving a gift to help someone start or continue their business?

Put the agreement into writing. The agreement should specifically state that it is a gift. If it is a loan, the agreement should outline the payment terms including the interest rate.

Which of the following statements regarding accounts receivable are correct? (Check all that apply.)

The key to controlling receivables is to sort them by age, so older receivables stand out. Many businesses treat receivables that are more than 90 days old as delinquent. Accounts receivable is money that customers owe a company.

Which of the following statements regarding angel investors are correct? (Check all that apply.)

They invest in businesses due to their personal interest and as a personal investment. They typically invest between $50 and $250K. They like businesses that are located near them. They invest their own money.

______ is/are standardized rules for accounting procedures set out by the Financial Accounting Standards Board, and used in all audits, and submissions of accounting reports to the government.

Generally accepted accounting principles

Which of the following statements about the growth trap are correct? (Check all that apply.)

Businesses that grow at exponential rates often experience the growth trap. Too much good news may contribute to a growth trap because of a cash shortage. Growing produces more money, but cash is needed right away to grow, thus the business gets trapped.

Which of the following statements regarding collateral are correct? (Check all that apply.)

Most intangible assets are not thought to be good collateral. The value of collateral is simply the estimated market value of the asset being used. Collateral can include stocks, bonds, and physical goods, like land.

Which of the following are reasons business owners should use outside equity. (Check all that apply.)

The business will not have increased costs in the form of interest. Outside equity lessens the owner's exposure to financial loss.

Which of the following statements about budgeting are correct? (Check all that apply.)

The first step of budgeting is making a forecast of future sales. It becomes a standard against which a business' performance can be measured. The budget becomes the basis for controlling activities and the use of resources. It is a quantitative expression of the use of resources necessary to achieve a business' strategic goals.

Which of the following statements regarding cash equivalents are correct? (Check all that apply.)

They are assets that may be turned into cash in as little as a few hours. Examples of cash equivalents are marketable securities, commercial paper, and debt investments that mature in less than three months. Businesses use cash equivalents to measure how much money is available to be spent.

Which of the following statements regarding discounts for prompt payment are correct?

They may be as much as 2% if the invoice is paid within 5 to 10 business days. They are used to motivate customers to pay their bills in full in a timely manner.

Which of the following statements describe a business that has financial strength? (Check all that apply.)

A business has focused on cash, short-term investments, and its accounts receivable are current. A business' long-term assets are relatively new, long-term debt is low, and retirement plans are fully funded. The business has a great deal of cash and cash equivalents on its balance sheet..

The _____ is an accounting concept that a business is expected to continue in existence for the foreseeable future.

going concern concept

A partnership business form is

when two or more people cooperating to conduct a business enterprise.

Which of the following statements regarding variances are correct? (Check all that apply.)

A business owner should examine the variance to determine the significance between the budget and actual spending. Budgets will always have at least a small variance. Small variances should be ignored. An owner may be able to determine where the business is not meeting its goals by studying the variances report.

Which of the following statements about accelerators are correct? (Check all that apply.)

The goal is to accelerate a start-up from its early stages to being ready to pitch for investment. They tend to specialize in companies in a specific segment like biotechnology, fashion, women-owned firms, etc. Most accelerators take an equity stake in the companies they help.

Which of the following are purposes of controlling the quantity of cash outflow? (Check all that apply.)

Avoiding waste Making good buying decisions

For all small businesses, the cash receipts budget is the same as the sales budget.

False

Fixed asset

Automatically calculates and adds depreciation

______ is a financial crisis that is caused by a business growing faster than it can be financed.

Growth trap

Investment records

Records if businesses keep surplus cash invested in securities

Debt is

a legal obligation to pay money in the future.

Money held in checking and savings accounts are/is called ______.

demand deposits

______ costs are those costs that change with each unit produced.

Variable

Financial leverage is

a measure of the amount of debt relative to total investment.

A small business investment company is

a private business that is authorized to make SBA-insured loans to start-ups and small businesses.

A(n) ______ is an organization that supports start-ups with a financial investment, free or inexpensive space, mentoring, and other services.

accelerator

A(n) is a chronological list of all additions to and subtractions from a single type of asset.

account

The _____ demonstrates that the claims of creditors and owners in total cannot be greater than the asset value of a business.

accounting equation

Receivables are

amounts that are owed to a business for merchandise that was sold on credit.

are those through which cash is obtained from and paid to lenders, owners, and investors.

Financing activities

If a firm owner's equity in the firm is $100,000 and he or she has liabilities that amount to $22,000, then according the accounting equation, his or her assets would be worth _____.

$122,000

Cash inflows

Money borrowed through notes, mortgages, and bonds

Inventory

Calculates appropriate stocking and reorder levels

Which of the following are sources of cash?

Selling a business' products and services & collecting cash from customers. Through financing through debt or equity. Investment that a business has made, such as in stocks, bonds, and land.

The practice of trading goods and services without the use of money is known as .

barter

______ is a legal obligation to pay money in the future.

Debt

______ is an increase in owners' equity caused by selling a product or service.

Revenue

is a medium of exchange accepted by the community.

money

Cash outflows

matches Choice Capital repaid to owners

Which of the following represents a best cash flow management practice? (Check all that apply.)

Accounts receivables should be closely monitored for late payments. There should be enough cash available to meet a business' needs. Owners should understand how and when the business uses its cash. Owners should be able to obtain cash quickly from a variety of sources.

Using a computerized accounting system, which of the following documents may be generated that will indicate the amount of cash a business needs immediately? (Check all that apply.)

An accounts receivable report An accounts payable report

Which of the following statements about consignments are correct? (Check all that apply.)

An advantage is that they do not have to be paid for until sold. Many industries like the salty snacks, used furniture, and sporting goods use consignments. They are the norm in operating art galleries.

______ consists of stocks and bonds that are traded on an open market.

Marketable securities

Which of the following is a primary cause of cash flow problems in small businesses?

Requirement for making big capital investments periodically

Which of the following are factors that control cash outflow? (Check all that apply.)

The amount of cash that is to be paid out The timing of cash payout

Profitability ratios

They calculate management efficacy in generating wealth from sales and from invested funds.

In the context of accounting functions, _____ records to track what a business owes and to make timely payments in order to capture prompt pay discounts and help maintain a good credit rating for a business.

accounts payable

Money that is owned to a business by customers is tracked by the firm's ______.

accounts receivable

A ______ is a direct reduction in the amount of taxes that must be paid, dependent on meeting some legal criteria.

tax credit

Variable costs are expenses

that change with each unit produced.

Risk is

the level of probability that an investment will not produce expected gains.

______ ratio is the value of current assets divided by current liabilities.

Current

Which of the following statements regarding microlenders are correct? (Check all that apply.)

Loans are guaranteed by the Small Business Administration. They can only lend up to $50,000. Loans require less paperwork than regular Small Business Administration backed loans.

The cost of is the percentage cost of obtaining future funds.

capital

Cash is

money that is immediately available to be spent.

______ activities are the purchase and sale of land, buildings, equipment, and securities.

Investing

An expense is

a decrease in owners' equity caused by consuming a business' product or service.

______ activities are those activities involved in producing and selling goods and services.

Operating

Planning documents for future business activities that are formatted to look like the common financial statements of the income statement, balance sheet, and statement of cash flows are called _____.

pro forma financial statements

The final schedules completed to create a master budget are used to prepare a(n) _____.

pro forma projected balance sheet

The amount that revenues exceed expenses is known as .

profit

The process of creating a set of interconnected budgets that combine into a master budget that can be used for assessing and controlling the business processes is called _____.

profit planning

The _____ depicts the number of units that are expected to be acquired during a budget period.

purchases budget

Amounts that are owed to a business for merchandise that was sold on credit are called ______.

receivables

An accounting process that identifies the causes of all difference between book and bank balances is known as ______.

reconciling

Which of the following is an example of a fixed cost? (Check all that apply.)

rent loan payments truck leases

is the level of probability that an investment will not produce expected gains.

risk

A method of obtaining capital in which investors give money to a business in return for a guaranteed percentage of revenues is referred to as _____.

royalty financing

Loans that provide the lender with the legal right to seize specific assets in the event of nonpayment is called ______ debt.

secured

A ______ is a private business that is authorized to make SBA-insured loans to start-ups and small businesses.

small business investment company (SBIC)

An asset is

something that a business owns that is expected to have economic value in the future.

A method for business forecasting and control in which specific expected volumes and prices per unit are used is called . (Enter one word in each blank.)

standard budgeting/ profit planning

Customers may overdraft their accounts by paying a check when _____.

the available balance is not sufficient to cover the check amount

Activity ratios

They calculate how productive a particular asset is in producing sales activity.

Assets that may be quickly converted to cash are called ______.

cash equivalents

The company book balance reflects a business' internal accounting record of all transactions that affect ______.

cash

Which of the following are assumptions that underlie basic accounting concepts? (Check all that apply.)

A business is separate from its owners. An operating business will continue to remain in business.

______ is/are payments of profits to the owners of corporations.

Dividends

Identify the schedules that must be completed to create a master budget. (Check all that apply.)

A cash budget A cash receipts budget

Which of the following is a reason that bootstrapping is common among small business start-ups?

Banks do not lend money to start-up businesses.

A situation that occurs when a check is returned to a depositor because the writer of the check did not have a bank available balance equal to or greater than the amount of the check is called or NSF.

nonsufficiant funds

A negative balance in a depositor's bank account is called .

overdraft

Using low-cost or free techniques to minimize the cost of doing business is called .

bootstrapping

Which of the following is true of the bank available balance?

It may differ significantly from the bank ledger balance.

The most prevalent way employees steal cash from employers is through larceny and embezzlement.

False

Liquidity ratios

They determine a business's capacity to pay debts and expenses that are due in the current accounting period.

In which of the following ways can a firm owner collect receivables from customers? (Check all that apply.)

Setting up a billing system Offering discounts for early payments

______ is a method of controlling the timing of cash outflows that is invisible to suppliers and vendors.

Timing purchases

______ capital is capital resources that neither provide any ownership nor require any repayment to the giver.

Gift

______ is planning and tracking the amounts and timing of money to be received and paid during the business cycle.

Cash flow management

A(n) ______ describes what a business owns, what it owes to others, and how much value the owners have invested in it.

balance sheet

Identify the primary credit reporting agencies (CRAs). (Check all that apply.)

TransUnion Innovis Equifax Experian