Question 1

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 2

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 3

On a firm's income statement, net sales consists of:

Accepted Answer

A)  operating expenses minus cost of sales 
B)  total sales minus allowances for returned goods and discounts 
C)  cost of sales minus allowances for returned goods and discounts 
D)  cost of sales minus operating expenses 
E)  total sales minus operating expenses 
A)  operating expenses minus cost of sales 
B)  total sales minus allowances for returned goods and discounts 
C)  cost of sales minus allowances for returned goods and discounts 
D)  cost of sales minus operating expenses 
E)  total sales minus operating expenses

Question 4

When evaluating a balance sheet, the two primary questions are:

Accepted Answer

A)  whether a firm has sufficient short-term assets to cover its short-term debts and whether it is profitable 
B)  whether a firm is profitable and whether a firm is financially sound 
C)  whether its costs of sales is going up and whether it is generating excess cash that could be used to pay down debt or pay dividends 
D)  whether a firm has sufficient short-term assets to cover its short-term debts and whether it is financially sound 
E)  whether a firm is profitable and whether it is generating excess cash that could be used to pay down debt or pay dividends 
A)  whether a firm has sufficient short-term assets to cover its short-term debts and whether it is profitable 
B)  whether a firm is profitable and whether a firm is financially sound 
C)  whether its costs of sales is going up and whether it is generating excess cash that could be used to pay down debt or pay dividends 
D)  whether a firm has sufficient short-term assets to cover its short-term debts and whether it is financially sound 
E)  whether a firm is profitable and whether it is generating excess cash that could be used to pay down debt or pay dividends

Question 5

A company's merchandise, raw materials, and products waiting to be sold are called its:

Accepted Answer

A)  set aside 
B)  accumulation 
C)  reserve 
D)  inventory 
E)  stock 
A)  set aside 
B)  accumulation 
C)  reserve 
D)  inventory 
E)  stock

Question 6

A company's accounts receivable is money owed to it by its customers.

Accepted Answer

A) True 
 B)False

Question 7

Match the financial term with its proper definition.

Accepted Answer

A)  forecasts/depict relationships between items on a firm's financial statements 
B)  forecasts/written report that quantitatively describes a firm's financial health 
C)  budgets/itemized forecasts of a company's income, expenses, and capital needs 
D)  financial ratios/written report that quantitatively describes a firm's financial health 
E)  financial statements/an estimate of a firm's future income and expenses 
A)  forecasts/depict relationships between items on a firm's financial statements 
B)  forecasts/written report that quantitatively describes a firm's financial health 
C)  budgets/itemized forecasts of a company's income, expenses, and capital needs 
D)  financial ratios/written report that quantitatively describes a firm's financial health 
E)  financial statements/an estimate of a firm's future income and expenses

Question 8

Which of the financial statements used by businesses to keep track of their financial affairs is the most similar to an ordinary person's end-of-the month bank statement?

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  statement of ratio analysis 
E)  statement of owners' equity 
A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  statement of ratio analysis 
E)  statement of owners' equity

Question 9

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

Accepted Answer

A)  income statement 
B)  statement of cash flows 
C)  effectiveness statement 
D)  balance sheet 
E)  efficiency statement 
A)  income statement 
B)  statement of cash flows 
C)  effectiveness statement 
D)  balance sheet 
E)  efficiency statement

Question 10

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 an:

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 11

The pro forma balance sheet provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statement is incorrect regarding how balance sheets are prepared?

Accepted Answer

A)  The left hand side of a balance sheet shows a firm's assets. 
B)  The assets on a balance sheet are shown in order of liquidity. 
C)  Assets are recorded at fair market value rather than cost. 
D)  The right hand side of a balance sheet shows a firm's liabilities and it's owners' equity. 
E)  Intellectual property receives value in some cases and in some cases it does not. 
A)  The left hand side of a balance sheet shows a firm's assets. 
B)  The assets on a balance sheet are shown in order of liquidity. 
C)  Assets are recorded at fair market value rather than cost. 
D)  The right hand side of a balance sheet shows a firm's liabilities and it's owners' equity. 
E)  Intellectual property receives value in some cases and in some cases it does not.

Question 13

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 14

________ are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.

Accepted Answer

A)  Profitability statements 
B)  Financial statements 
C)  Owners' equity statements 
D)  Budgets 
E)  Statements of cash flows 
A)  Profitability statements 
B)  Financial statements 
C)  Owners' equity statements 
D)  Budgets 
E)  Statements of cash flows

Question 15

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

Accepted Answer

A) True 
 B)False

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:

On a firm's income statement, net sales consists of:

When evaluating a balance sheet, the two primary questions are:

A company's merchandise, raw materials, and products waiting to be sold are called its:

A company's accounts receivable is money owed to it by its customers.

Match the financial term with its proper definition.

Which of the financial statements used by businesses to keep track of their financial affairs is the most similar to an ordinary person's end-of-the month bank statement?

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

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 an:

The pro forma balance sheet provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.

Which of the following statement is incorrect regarding how balance sheets are prepared?

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

________ are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.

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

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 Venture's Financial Strength and Viability

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:

On a firm's income statement, net sales consists of:

When evaluating a balance sheet, the two primary questions are:

A company's merchandise, raw materials, and products waiting to be sold are called its:

A company's accounts receivable is money owed to it by its customers.

Match the financial term with its proper definition.

Which of the financial statements used by businesses to keep track of their financial affairs is the most similar to an ordinary person's end-of-the month bank statement?

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

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 an:

The pro forma balance sheet provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.

Which of the following statement is incorrect regarding how balance sheets are prepared?

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

________ are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.

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

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