Question 1

Money owed to a company by its customers is referred to as:

Accepted Answer

A)  accounts obtainable 
B)  accounts payable 
C)  accounts receivable 
D)  inventory 
E)  accounts collectable 
A)  accounts obtainable 
B)  accounts payable 
C)  accounts receivable 
D)  inventory 
E)  accounts collectable

Question 2

According to the textbook, the most practical way to interpret or make sense of a firm's historical financial statements is through:

Accepted Answer

A)  profit analysis 
B)  regression analysis 
C)  the preparation of pro forma financial statements 
D)  ratio analysis 
E)  percentage analysis 
A)  profit analysis 
B)  regression analysis 
C)  the preparation of pro forma financial statements 
D)  ratio analysis 
E)  percentage analysis

Question 3

What is ratio analysis? Why is it important?

Accepted Answer

The most practical way to interpret or m

Question 4

In regard to budgets, which of the following statements is not true?

Accepted Answer

A)  Budgets include an itemized forecast of a company's expenses. 
B)  Budgets are a poor tool for financial control. 
C)  Budgets are an important tool for financial planning. 
D)  Budgets include an itemized forecast of a company's capital needs. 
E)  Budgets include an itemized forecast of a company's income. 
A)  Budgets include an itemized forecast of a company's expenses. 
B)  Budgets are a poor tool for financial control. 
C)  Budgets are an important tool for financial planning. 
D)  Budgets include an itemized forecast of a company's capital needs. 
E)  Budgets include an itemized forecast of a company's income.

Question 5

In the context of a firm's statement of cash flows, operating activities include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

Accepted Answer

A) True 
 B)False

Question 6

The strength and vigor of a firm's overall financial posture is referred to as:

Accepted Answer

A)  liquidity 
B)  effectiveness 
C)  stability 
D)  profitability 
E)  efficiency 
A)  liquidity 
B)  effectiveness 
C)  stability 
D)  profitability 
E)  efficiency

Question 7

________ are an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

Accepted Answer

A)  Calculation statements 
B)  Forecasts 
C)  Statements of cash flow 
D)  Financial statements 
E)  Prediction statements 
A)  Calculation statements 
B)  Forecasts 
C)  Statements of cash flow 
D)  Financial statements 
E)  Prediction statements

Question 8

The balance sheet reflects the results of the operations of a firm over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 9

A firm's pro forma financial statements are similar to its historical financial statements except that:

Accepted Answer

A)  they do not include the income statement 
B)  they are required by the SEC in all cases 
C)  they look back rather than forward 
D)  they look forward rather than back 
E)  they do not include the statement of cash flows 
A)  they do not include the income statement 
B)  they are required by the SEC in all cases 
C)  they look back rather than forward 
D)  they look forward rather than back 
E)  they do not include the statement of cash flows

Question 10

Describe the purpose of the income statement, the balance sheet, and the statement of cash flows.

Accepted Answer

The income statement reflects the result

Question 11

The statement of cash flows is divided into three separate activities:

Accepted Answer

A)  profitability activities, stability activities, and investing activities 
B)  stability activities, earning activities, and financing activities 
C)  operating activities, capital activities, and liquidity activities 
D)  spending activities, earning activities, and capital activities 
E)  operating activities, investing activities, and financing activities 
A)  profitability activities, stability activities, and investing activities 
B)  stability activities, earning activities, and financing activities 
C)  operating activities, capital activities, and liquidity activities 
D)  spending activities, earning activities, and capital activities 
E)  operating activities, investing activities, and financing activities

Question 12

According to the textbook, the three numbers that receive the most attention when evaluating an income statement are:

Accepted Answer

A)  depreciation, interest income, and income tax expense 
B)  cost of sales, gross profit, and operating expenses 
C)  net sales, cost of sales, and operating expenses 
D)  gross profit, net sales, and incomes tax expense 
E)  gross profit, other income, and net income 
A)  depreciation, interest income, and income tax expense 
B)  cost of sales, gross profit, and operating expenses 
C)  net sales, cost of sales, and operating expenses 
D)  gross profit, net sales, and incomes tax expense 
E)  gross profit, other income, and net income

Question 13

Kevin Pierce was reading the business plan of New Venture Fitness Drinks, and noticed that prior to its financial forecasts, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the forecast and the assumptions used to generate them. This explanation is called a(n):

Accepted Answer

A)  forecast sheet 
B)  forecast hypothesis 
C)  estimate statement 
D)  assumption sheet 
E)  hypothesis sheet 
A)  forecast sheet 
B)  forecast hypothesis 
C)  estimate statement 
D)  assumption sheet 
E)  hypothesis sheet

Question 14

The four main financial objectives of a firm are:

Accepted Answer

A)  efficiency, effectiveness, strength, and flexibility 
B)  power, success, efficiency, and effectiveness 
C)  control, effectiveness, liquidity, and power 
D)  success, strength, liquidity, and profitability 
E)  profitability, liquidity, efficiency, and stability 
A)  efficiency, effectiveness, strength, and flexibility 
B)  power, success, efficiency, and effectiveness 
C)  control, effectiveness, liquidity, and power 
D)  success, strength, liquidity, and profitability 
E)  profitability, liquidity, efficiency, and stability

Question 15

Which of the following selections correctly matches the financial statement with its description?

Accepted Answer

A)  income statement/tells how much a firm is making or losing 
B)  income statement/depicts the structure of a firm's assets and liabilities 
C)  balance sheet/shows where a firm's cash is coming from 
D)  balance sheet/tells how much a firm is making or losing 
E)  statement of cash flows/depicts the structure of a firm's assets and liabilities 
A)  income statement/tells how much a firm is making or losing 
B)  income statement/depicts the structure of a firm's assets and liabilities 
C)  balance sheet/shows where a firm's cash is coming from 
D)  balance sheet/tells how much a firm is making or losing 
E)  statement of cash flows/depicts the structure of a firm's assets and liabilities

Question 16

A firm's working capital is its:

Accepted Answer

A)  inventory and accounts receivable minus its current liabilities 
B)  current assets minus its current liabilities 
C)  total assets minus its total liabilities 
D)  cash and cash equivalents minus its current liabilities 
E)  accounts receivable minus its total accounts payable 
A)  inventory and accounts receivable minus its current liabilities 
B)  current assets minus its current liabilities 
C)  total assets minus its total liabilities 
D)  cash and cash equivalents minus its current liabilities 
E)  accounts receivable minus its total accounts payable

Question 17

Historical financial statements reflect past performance and are usually prepared on a quarterly and annual basis.

Accepted Answer

A) True 
 B)False

Question 18

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

Accepted Answer

A) True 
 B)False

Question 19

A company's ability to productively utilize its assets relative to its revenue and its profits is referred to as:

Accepted Answer

A)  efficiency 
B)  effectiveness 
C)  stability 
D)  liquidity 
E)  profitability 
A)  efficiency 
B)  effectiveness 
C)  stability 
D)  liquidity 
E)  profitability

Question 20

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Accepted Answer

A)  statement of cash flows 
B)  income statement 
C)  forecast 
D)  balance sheet 
E)  operating budget 
A)  statement of cash flows 
B)  income statement 
C)  forecast 
D)  balance sheet 
E)  operating budget

Money owed to a company by its customers is referred to as:

According to the textbook, the most practical way to interpret or make sense of a firm's historical financial statements is through:

What is ratio analysis? Why is it important?

In regard to budgets, which of the following statements is not true?

In the context of a firm's statement of cash flows, operating activities include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

The strength and vigor of a firm's overall financial posture is referred to as:

________ are an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

The balance sheet reflects the results of the operations of a firm over a specified period of time.

A firm's pro forma financial statements are similar to its historical financial statements except that:

Describe the purpose of the income statement, the balance sheet, and the statement of cash flows.

The statement of cash flows is divided into three separate activities:

According to the textbook, the three numbers that receive the most attention when evaluating an income statement are:

Kevin Pierce was reading the business plan of New Venture Fitness Drinks, and noticed that prior to its financial forecasts, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the forecast and the assumptions used to generate them. This explanation is called a(n):

The four main financial objectives of a firm are:

Which of the following selections correctly matches the financial statement with its description?

A firm's working capital is its:

Historical financial statements reflect past performance and are usually prepared on a quarterly and annual basis.

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

A company's ability to productively utilize its assets relative to its revenue and its profits is referred to as:

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Building a New Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters

Exam 8: Assessing a New Ventures Financial Strength and Viability

Money owed to a company by its customers is referred to as:

According to the textbook, the most practical way to interpret or make sense of a firm's historical financial statements is through:

What is ratio analysis? Why is it important?

In regard to budgets, which of the following statements is not true?

In the context of a firm's statement of cash flows, operating activities include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

The strength and vigor of a firm's overall financial posture is referred to as:

________ are an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

The balance sheet reflects the results of the operations of a firm over a specified period of time.

A firm's pro forma financial statements are similar to its historical financial statements except that:

Describe the purpose of the income statement, the balance sheet, and the statement of cash flows.

The statement of cash flows is divided into three separate activities:

According to the textbook, the three numbers that receive the most attention when evaluating an income statement are:

Kevin Pierce was reading the business plan of New Venture Fitness Drinks, and noticed that prior to its financial forecasts, New Venture Fitness Drinks placed an explanation of the sources of the numbers for the forecast and the assumptions used to generate them. This explanation is called a(n):

The four main financial objectives of a firm are:

Which of the following selections correctly matches the financial statement with its description?

A firm's working capital is its:

Historical financial statements reflect past performance and are usually prepared on a quarterly and annual basis.

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

A company's ability to productively utilize its assets relative to its revenue and its profits is referred to as:

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Building a New Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Preparing for and Evaluating the Challenges of Growth

Strategies for Firm Growth

Franchising

Filters