Exam 14: Basic Financial Planning

Gemini Inc. earned a net income of $250,000 in the year 2000. If its expenses for that year amounted to $50,000, what was the revenue that Gemini Inc. earned in the year 2000?

Holding too much cash reduces a small business owner's income because it produces no revenue.

Profits are not necessarily in the form of cash.

Current assets are expected to _____.

______ refers to the owners' net worth in the business after liabilities are subtracted from assets.

According to the most basic accounting truth, the total liabilities plus owners' equity always exceeds the total assets of the firm.

Which of the following is an example of current liability?

Long-range planning is important for a well-managed small business firm.

Accounts payable are usually due within a few years.

Which of the following is true of the breakeven point?

Which of the following refers to a profit planning step in the context of small businesses?

Cost of goods sold is:

A _____ is a statement of a firm's assets, liabilities, and owners' equity at a given time.

In the context of small businesses, list the steps in profit planning for small businesses.

_______ refer(s) to obligations to pay, resulting from purchasing goods or services.

Small business owners need not absorb the losses of the firm.

Profit planning must be initiated only after all other planning activities have been completed.

In the context of small businesses, _____ is the first step in profit planning.

_____ describes the relative proportions of a firm's assets, liabilities, and owners' equity.

The type of business one is entering is of little significance in determining the amount of startup funds one will require.