ITB Chapter 6 And 7 Review Question Preview (ID: 35666)
Review For Test Over Sources Of Funding And Financial Accounting.
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A person who follows his or her dreams by assuming the risk of starting a new business is a(n) ____.
a) private investor
b) entrepreneur
c) “angel”
d) venture capitalist
What is the highest percentage of market value a home equity loan will provide?
a) 80 percent
b) 60 percent
c) 50 percent
d) 20 percent
A home equity loan is an example of ____.
a) insider financing
b) bank funding
c) an unsecured loan
d) personal financing
For unexpected costs, businesses often use ____.
a) insider financing
b) a line of credit
c) a long-term commercial loan
d) a home equity loan
Comments from creditors are helpful to a bank when assessing a would-be borrower’s ____.
a) capacity
b) capital
c) character
d) collateral
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
A disadvantage of funding a business with business credit cards is ____.
a) extensive paperwork
b) high interest rates
c) the need for collateral
d) the long wait for a reply
Which source of funding expects to have a major voice in a business’s decisions?
a) a local government
b) a venture capital firm
c) a commercial finance company
d) a bank
Which of the five C’s of credit refers to your business’s ability to repay the loan on time?
a) collateral
b) character
c) capacity
d) capital
Money used to expand a business comes out of ____.
a) start-up costs
b) operating costs
c) cash flow
d) reserve funds
An accounting period usually covers one ____.
a) week
b) month
c) quarter
d) year
An owner’s claim to the assets of a business is called owner’s ____.
a) property
b) liabilities
c) equity
d) credits
When accountants record business transactions, they use a system called ____.
a) accounts receivable
b) accounts payable
c) the accounting equation
d) double-entry accounting
An asset account increases on ____ of a T account.
a) the debit side
b) both sides
c) the credit side
d) the right side
The final step of the accounting cycle is ____.
a) collecting source documents
b) preparing a trial balance
c) posting to the general ledger
d) journalizing each transaction
What does a business owner or an accountant use to analyze transactions?
a) a general ledger
b) T accounts
c) a general journal
d) a trial balance
An income statement has all of the following sections EXCEPT ____.
a) current liabilities
b) operating expenses
c) gross profit on sales
d) revenues
Which term refers to the amount of revenue that remains after expenses for the period are subtracted from profits?
a) net income
b) cost of merchandise sold
c) markup
d) gross profit on sales
On a balance sheet, the balance in accounts payable decreases when ____.
a) merchandise is sold for cash
b) supplies are purchased
c) owner’s equity increases
d) money is paid to creditors
What is a benefit of using accounting software for computerized posting?
a) eliminates need for source documents
b) eliminates accounting errors
c) eliminates need for account numbers
d) eliminates liability of business owner
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