Question 1

What is the difference between the respective purposes of the balance sheet and the income statement?

Accepted Answer

a.The balance sheet enumerates all the company's assets, liabilities and shareholder equity.It reflects a company's state of affairs at a given point of time.
b.The income statement describes how well a company conducted its business over a period of time.
c.Both of them form a basis that helps you to understand the company and how it is doing

Question 2

What is the best way to validate costs?

Accepted Answer

A) Validating costs is not necessary. 
B) Adjust your business model. 
C) Ask your customers. 
D) Compare your balance sheet with your competitors' balance sheets. 
E) Compare your common-sized income statement with the industry averages or some benchmark companies. 
A) Validating costs is not necessary. 
B) Adjust your business model. 
C) Ask your customers. 
D) Compare your balance sheet with your competitors' balance sheets. 
E) Compare your common-sized income statement with the industry averages or some benchmark companies. E

Question 3

What does the Comparable Method help an entrepreneur to do?

Accepted Answer

A) Estimate project cost 
B) Research the industry 
C) Benchmark competitors 
D) Calculate operating expenses 
E) Validate projections 
A) Estimate project cost 
B) Research the industry 
C) Benchmark competitors 
D) Calculate operating expenses 
E) Validate projections E

Question 4

According to the chapter, it takes time to:

Accepted Answer

A) Build up your clientele 
B) Learn to operate efficiently 
C) Develop track record 
D) Understand seasonality 
E) All of the above 
A) Build up your clientele 
B) Learn to operate efficiently 
C) Develop track record 
D) Understand seasonality 
E) All of the above

Question 5

Explain what a "brief description of your financial spreadsheets" should include.

Accepted Answer

a.It should be a two to three page expla

Question 6

Many noncash transactions are represented in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

The bottom line of the income statement states the company's _______.

Accepted Answer

A) net size 
B) net income 
C) revenue less expenses 
D) net assets value 
E) gross profit margin 
A) net size 
B) net income 
C) revenue less expenses 
D) net assets value 
E) gross profit margin

Question 8

Briefly describe the principle of the build-up method and its advantages.

Accepted Answer

a.Identify all your sources of revenues

Question 9

For an asset to appear on the balance sheet it must generate revenue.

Accepted Answer

A) True 
 B)False

Question 10

The expenses that a business incurred appear on a different financial document than the amount of cash that it spent.

Accepted Answer

A) True 
 B)False

Question 11

Most pro-forma projections for new companies show monthly income figures for the first two years.

Accepted Answer

A) True 
 B)False

Question 12

Seasonality is important because it affects which of the following:

Accepted Answer

A) Product or service demand 
B) Financial decisions 
C) Key operations and decisions such as hiring 
D) A & C 
E) All of the above 
A) Product or service demand 
B) Financial decisions 
C) Key operations and decisions such as hiring 
D) A & C 
E) All of the above

Question 13

The statement of cash flows starts with which of the following?

Accepted Answer

A) Net Income 
B) Costs 
C) Expenses 
D) Net Assets 
E) Net Liabilities 
A) Net Income 
B) Costs 
C) Expenses 
D) Net Assets 
E) Net Liabilities

Question 14

Under the Comparable Method, you can see how the model changes overall when you:

Accepted Answer

A) Increase your revenues 
B) Leverage your drivers 
C) Tweak your inventories 
D) Change one of the assumptions 
E) Decrease your costs 
A) Increase your revenues 
B) Leverage your drivers 
C) Tweak your inventories 
D) Change one of the assumptions 
E) Decrease your costs

Question 15

The build-up method drills down revenue projections to a typical ______.

Accepted Answer

A) hour 
B) day 
C) month 
D) quarter 
E) year 
A) hour 
B) day 
C) month 
D) quarter 
E) year

Question 16

Revenue projections help you to understand the company's revenue drivers.

Accepted Answer

A) True 
 B)False

Question 17

Typically, a business begins to generate revenue within the first two months after it launches.

Accepted Answer

A) True 
 B)False

Question 18

An entrepreneur must be able to ___________, if his income statement does not match the industry average?

Accepted Answer

A) remove any information that deviates from the average 
B) adjust and refine your metrics accordingly 
C) understand and explain the differences 
D) change the metrics to more appropriate ones 
E) rewrite your projections from scratch 
A) remove any information that deviates from the average 
B) adjust and refine your metrics accordingly 
C) understand and explain the differences 
D) change the metrics to more appropriate ones 
E) rewrite your projections from scratch

Question 19

When building a revenue worksheet, an entrepreneur has to begin with certain assumptions.What are three ways for an entrepreneur to later strengthen those initial assumptions?

Accepted Answer

a.Observe the behavior of customers of s

Question 20

What is a "hockey stick" projection and what is so unrealistic about it?

Accepted Answer

a.A "hockey stick" graph is a projection

What is the difference between the respective purposes of the balance sheet and the income statement?

What is the best way to validate costs?

What does the Comparable Method help an entrepreneur to do?

According to the chapter, it takes time to:

Explain what a "brief description of your financial spreadsheets" should include.

Many noncash transactions are represented in the balance sheet.

The bottom line of the income statement states the company's _______.

Briefly describe the principle of the build-up method and its advantages.

For an asset to appear on the balance sheet it must generate revenue.

The expenses that a business incurred appear on a different financial document than the amount of cash that it spent.

Most pro-forma projections for new companies show monthly income figures for the first two years.

Seasonality is important because it affects which of the following:

The statement of cash flows starts with which of the following?

Under the Comparable Method, you can see how the model changes overall when you:

The build-up method drills down revenue projections to a typical ______.

Revenue projections help you to understand the company's revenue drivers.

Typically, a business begins to generate revenue within the first two months after it launches.

An entrepreneur must be able to ___________, if his income statement does not match the industry average?

When building a revenue worksheet, an entrepreneur has to begin with certain assumptions.What are three ways for an entrepreneur to later strengthen those initial assumptions?

What is a "hockey stick" projection and what is so unrealistic about it?

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Facing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship: an Overview

Filters

Exam 8: Building Your Pro Forma Financial Statements

What is the difference between the respective purposes of the balance sheet and the income statement?

What is the best way to validate costs?

What does the Comparable Method help an entrepreneur to do?

According to the chapter, it takes time to:

Explain what a "brief description of your financial spreadsheets" should include.

Many noncash transactions are represented in the balance sheet.

The bottom line of the income statement states the company's _______.

Briefly describe the principle of the build-up method and its advantages.

For an asset to appear on the balance sheet it must generate revenue.

The expenses that a business incurred appear on a different financial document than the amount of cash that it spent.

Most pro-forma projections for new companies show monthly income figures for the first two years.

Seasonality is important because it affects which of the following:

The statement of cash flows starts with which of the following?

Under the Comparable Method, you can see how the model changes overall when you:

The build-up method drills down revenue projections to a typical ______.

Revenue projections help you to understand the company's revenue drivers.

Typically, a business begins to generate revenue within the first two months after it launches.

An entrepreneur must be able to ___________, if his income statement does not match the industry average?

When building a revenue worksheet, an entrepreneur has to begin with certain assumptions.What are three ways for an entrepreneur to later strengthen those initial assumptions?

What is a "hockey stick" projection and what is so unrealistic about it?

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Facing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship: an Overview

Filters