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ITB Chapter 6 And 7 Review
Test Description: Review for test over sources of funding and financial accounting
Instructions: Answer all questions to get your test result.
1) A person who follows his or her dreams by assuming the risk of starting a new business is a(n) ____.
A
venture capitalist
B
entrepreneur
C
private investor
D
“angel”
2) What is the highest percentage of market value a home equity loan will provide?
A
50 percent
B
20 percent
C
60 percent
D
80 percent
3) A home equity loan is an example of ____.
A
an unsecured loan
B
bank funding
C
personal financing
D
insider financing
4) For unexpected costs, businesses often use ____.
A
a line of credit
B
insider financing
C
a home equity loan
D
a long-term commercial loan
5) Comments from creditors are helpful to a bank when assessing a would-be borrower’s ____.
A
character
B
capacity
C
capital
D
collateral
6) Less paperwork and a shorter response time are the advantages of applying for a loan through the ____.
A
Small Business Investment Companies
B
Low Documentation Program
C
Fortune 500 companies
D
Angel Capital Electronic Network
7) A disadvantage of funding a business with business credit cards is ____.
A
the long wait for a reply
B
extensive paperwork
C
high interest rates
D
the need for collateral
8) Which source of funding expects to have a major voice in a business’s decisions?
A
a venture capital firm
B
a commercial finance company
C
a bank
D
a local government
9) Which of the five C’s of credit refers to your business’s ability to repay the loan on time?
A
character
B
capacity
C
collateral
D
capital
10) Money used to expand a business comes out of ____.
A
operating costs
B
reserve funds
C
start-up costs
D
cash flow
11) An accounting period usually covers one ____.
A
month
B
year
C
quarter
D
week
12) An owner’s claim to the assets of a business is called owner’s ____.
A
property
B
liabilities
C
credits
D
equity
13) When accountants record business transactions, they use a system called ____.
A
the accounting equation
B
accounts payable
C
double-entry accounting
D
accounts receivable
14) An asset account increases on ____ of a T account.
A
the debit side
B
the credit side
C
both sides
D
the right side
15) The final step of the accounting cycle is ____.
A
preparing a trial balance
B
collecting source documents
C
journalizing each transaction
D
posting to the general ledger
16) What does a business owner or an accountant use to analyze transactions?
A
a trial balance
B
T accounts
C
a general journal
D
a general ledger
17) An income statement has all of the following sections EXCEPT ____.
A
operating expenses
B
gross profit on sales
C
revenues
D
current liabilities
18) Which term refers to the amount of revenue that remains after expenses for the period are subtracted from profits?
A
net income
B
markup
C
gross profit on sales
D
cost of merchandise sold
19) On a balance sheet, the balance in accounts payable decreases when ____.
A
owner’s equity increases
B
supplies are purchased
C
money is paid to creditors
D
merchandise is sold for cash
20) What is a benefit of using accounting software for computerized posting?
A
eliminates accounting errors
B
eliminates liability of business owner
C
eliminates need for account numbers
D
eliminates need for source documents
*select an answer for all questions
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