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