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