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