Chapter 6 And 7 Question Preview (ID: 62197)
Sources Of Funding And Accounting.
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Which term refers to the amount of revenue that remains after expenses for the period are subtracted from profits?
a) markup
b) net income
c) gross profit on sales
d) cost of merchandise sold
An income statement has all of the following sections EXCEPT ____.
a) revenues
b) gross profit on sales
c) operating expenses
d) current liabilities
What does a business owner or an accountant use to analyze transactions?
a) a general journal
b) T accounts
c) a general ledger
d) a trial balance
The final step of the accounting cycle is ____.
a) journalizing each transaction
b) collecting source documents
c) preparing a trial balance
d) posting to the general ledger
When accountants record business transactions, they use a system called ____.
a) double-entry accounting
b) accounts receivable
c) accounts payable
d) the accounting equation
An asset account increases on ____ of a T account.
a) the debit side
b) the credit side
c) the right side
d) both sides
An owner’s claim to the assets of a business is called owner’s ____.
a) property
b) liabilities
c) equity
d) credits
An accounting period for a small business usually covers one ____.
a) week
b) month
c) quarter
d) year
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) capital
d) collateral
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 venture capital firm
d) a local government
A disadvantage of funding a business with business credit cards is ____.
a) high interest rates
b) extensive paperwork
c) the need for collateral
d) the long wait for a reply
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
Comments from creditors are helpful to a bank when assessing a would-be borrower’s ____.
a) capacity
b) capital
c) character
d) collateral
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
A home equity loan is an example of ____.
a) insider financing
b) bank funding
c) an unsecured loan
d) personal financing
What is the highest percentage of market value a home equity loan will provide?
a) 60 percent
b) 50 percent
c) 4 percent
d) 80 percent
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) venture capitalist
d) angel
Money used to expand a business comes out of ____.
a) start-up costs
b) operating costs
c) reserve funds
d) cash flow
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
What is a benefit of using accounting software for computerized posting?
a) eliminates liability of business owner
b) eliminates accounting errors
c) eliminates need for source documents
d) eliminates need for account numbers
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