Question 1

A financial statement is a(n) ________.

Accepted Answer

A)  set of ratios which depict relationships between a firm's financial items 
B)  estimate of a firm's future income and expenses 
C)  hybrid statement of cash flows 
D)  itemized forecast of a company's income, expenses, and capital needs 
E)  written report that quantitatively describes a firm's financial health 
A)  set of ratios which depict relationships between a firm's financial items 
B)  estimate of a firm's future income and expenses 
C)  hybrid statement of cash flows 
D)  itemized forecast of a company's income, expenses, and capital needs 
E)  written report that quantitatively describes a firm's financial health

Question 2

Budgets 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) True 
 B)False

Question 3

In the context of a firm's statement of cash flows, ________ activities include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.

Accepted Answer

A)  investing 
B)  financing 
C)  operating 
D)  liquidity 
E)  capital 
A)  investing 
B)  financing 
C)  operating 
D)  liquidity 
E)  capital

Question 4

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 5

Southwest Airlines uses its assets very productively. Its turnaround time, or the time that its airplanes sit on the ground while they are being loaded and unloaded, is the lowest in the airline industry. In terms of the primary financial objectives of a firm, this attribute is a measure of Southwest's ________.

Accepted Answer

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

Question 6

The same financial ratios used to evaluate a firm's historical financial statement should be used to evaluate the pro forma financial statements.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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

Question 9

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 10

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 11

The Savvy Entrepreneurial Firm feature in Chapter 8 focuses on a scenario involving the selection of a new CEO for New Venture Fitness Drinks. The lesson learned from the feature was ________.

Accepted Answer

A)  compare a firm's financial ratios against its primary competitors and industry norms to fairly assess how well a firm is performing financially 
B)  income statements are more effective in assessing how well a firm is performing financially than are balance sheets and statements of cash flow 
C)  the most powerful instrument for understanding how well a firm is performing financially is the statement of cash flows 
D)  ratio analysis is ineffective 
E)  look at multiple years of an income statement rather than a single year to fairly assess how well a firm is performing financially 
A)  compare a firm's financial ratios against its primary competitors and industry norms to fairly assess how well a firm is performing financially 
B)  income statements are more effective in assessing how well a firm is performing financially than are balance sheets and statements of cash flow 
C)  the most powerful instrument for understanding how well a firm is performing financially is the statement of cash flows 
D)  ratio analysis is ineffective 
E)  look at multiple years of an income statement rather than a single year to fairly assess how well a firm is performing financially

Question 12

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

Accepted Answer

A)  Balance sheet 
B)  Owner's equity statement 
C)  Statement of cash flows 
D)  Forecast 
E)  Income statement 
A)  Balance sheet 
B)  Owner's equity statement 
C)  Statement of cash flows 
D)  Forecast 
E)  Income statement

Question 13

________ 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 14

According to the textbook, the most important function of the pro forma statement of cash flows is to project whether the firm will have sufficient ________.

Accepted Answer

A)  income to meet its payroll on a weekly or monthly basis 
B)  income to exceed industry norms 
C)  cash to meet its needs 
D)  inventory to meet its sales and production forecasts 
E)  short-term assets to cover its short-term liabilities 
A)  income to meet its payroll on a weekly or monthly basis 
B)  income to exceed industry norms 
C)  cash to meet its needs 
D)  inventory to meet its sales and production forecasts 
E)  short-term assets to cover its short-term liabilities

Question 15

Financial management deals with two things-managing a company's finances and ________.

Accepted Answer

A)  operations management 
B)  inventory control 
C)  raising money 
D)  production management 
E)  supply chain management 
A)  operations management 
B)  inventory control 
C)  raising money 
D)  production management 
E)  supply chain management

Question 16

Financial management deals with raising money and managing a company's finances in a way that achieves the highest rate of return.

Accepted Answer

A) True 
 B)False

Question 17

The break-even point for a new restaurant or product is the point where the total revenue received equals total costs associated with the output of the restaurant or the sale of the product.

Accepted Answer

A) True 
 B)False

Question 18

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 19

The Partnering for Success feature in Chapter 8 focuses on buying groups, and recommends that small businesses seek out buying groups to participate in. What is a "buying group" in the context of the feature?

Accepted Answer

A)  A partnership that bands small businesses together to attain volume discounts on common products and services that they buy 
B)  A partnership that bands small businesses together to collectively make the commitment to "buy local" at every available opportunity 
C)  A partnership that bands small businesses together to get the best prices possible from foreign importers and manufacturers 
D)  A partnership that bands small businesses together to get the best possible terms from finance companies 
E)  A partnership that bands small businesses together to get the best possible rates on property and liability insurance 
A)  A partnership that bands small businesses together to attain volume discounts on common products and services that they buy 
B)  A partnership that bands small businesses together to collectively make the commitment to "buy local" at every available opportunity 
C)  A partnership that bands small businesses together to get the best prices possible from foreign importers and manufacturers 
D)  A partnership that bands small businesses together to get the best possible terms from finance companies 
E)  A partnership that bands small businesses together to get the best possible rates on property and liability insurance

Question 20

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 its 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 its owners' equity. 
E)  Intellectual property receives value in some cases and in some cases it does not.

A financial statement is a(n) ________.

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

In the context of a firm's statement of cash flows, ________ activities include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.

Money owed to a company by its customers is referred to as ________.

The same financial ratios used to evaluate a firm's historical financial statement should be used to evaluate the pro forma financial statements.

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

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.

The statement of cash flows is divided into three separate activities ________.

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?

The Savvy Entrepreneurial Firm feature in Chapter 8 focuses on a scenario involving the selection of a new CEO for New Venture Fitness Drinks. The lesson learned from the feature was ________.

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

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

According to the textbook, the most important function of the pro forma statement of cash flows is to project whether the firm will have sufficient ________.

Financial management deals with two things-managing a company's finances and ________.

Financial management deals with raising money and managing a company's finances in a way that achieves the highest rate of return.

The break-even point for a new restaurant or product is the point where the total revenue received equals total costs associated with the output of the restaurant or the sale of the product.

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

The Partnering for Success feature in Chapter 8 focuses on buying groups, and recommends that small businesses seek out buying groups to participate in. What is a "buying group" in the context of the feature?

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

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

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

A financial statement is a(n) ________.

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

In the context of a firm's statement of cash flows, ________ activities include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.

Money owed to a company by its customers is referred to as ________.

The same financial ratios used to evaluate a firm's historical financial statement should be used to evaluate the pro forma financial statements.

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

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.

The statement of cash flows is divided into three separate activities ________.

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?

The Savvy Entrepreneurial Firm feature in Chapter 8 focuses on a scenario involving the selection of a new CEO for New Venture Fitness Drinks. The lesson learned from the feature was ________.

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

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

According to the textbook, the most important function of the pro forma statement of cash flows is to project whether the firm will have sufficient ________.

Financial management deals with two things-managing a company's finances and ________.

Financial management deals with raising money and managing a company's finances in a way that achieves the highest rate of return.

The break-even point for a new restaurant or product is the point where the total revenue received equals total costs associated with the output of the restaurant or the sale of the product.

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

The Partnering for Success feature in Chapter 8 focuses on buying groups, and recommends that small businesses seek out buying groups to participate in. What is a "buying group" in the context of the feature?

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

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Developing an Effective Business Model

Industry and Competitor Analysis

Writing a Business Plan

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