Quiz 6
Something of value given or pledged as security for payment of a loan is called
Collateral
Tammy has just opened a donut shop called The Rabbit Hole. Given that The Rabbit Hole is in its start-up phase, which of these would be Tammy's immediate financial management need?
Conserving what little money the business has
Statement of cash flows is also referred to as the statement of financial position
False
The accounting equation is simply stated as Assets = Liabilities - Owner's Equity
False
The more debt that is included in the capital mix, the higher is the weighted average cost
False
Financial statements are defined as
Formal summaries of the content of an accounting system's records of transactions
When debt increases as a percentage of total investment, returns on equity
Increase at a decreasing rate
In the accounting equation, assets equal
Liabilities plus owner's equity
____________ is the most used item on the income statement
Operating income
The difference between assets and liabilities of a business is called its
Owner's equity
Of the following answer options, which is the most available funding source for new businesses?
Owners' equity investments
Which of the following is a drawback to financing with debt?
Payment is expected even if you have no money to make the payment
Which among the following is an example of a variable cost?
Shipping
Accounting is important for small businesses because investors will not even consider funding your concept unless you provide specific accounting information in an accepted format
True
During the start-up phase of a small business the emphasis is on conserving what little cash the new business has.
True
Investing in multiple businesses increases the chances of offsetting possible losses incurred from one business.
True
Liquidity is a measure of the ability of a business to meet both short-term and long-term obligations.
True
Money borrowed for the purpose of investment in a business is called debt capital
True
The usefulness of the income statement for managing a small business is related to the amount of detail available in the statement
True
Which of the following describes angel investors?
Wealthy individuals who invest in companies in relatively early stages of development