Question 1

The formula for break-even analysis is:

Accepted Answer

A) total fixed costs divided by selling price minus variable cost per unit. 
B) total variable costs divided by marginal contribution. 
C) total sales divided by selling price plus variable cost per unit. 
D) total fixed costs divided by selling price plus marginal contribution. 
A) total fixed costs divided by selling price minus variable cost per unit. 
B) total variable costs divided by marginal contribution. 
C) total sales divided by selling price plus variable cost per unit. 
D) total fixed costs divided by selling price plus marginal contribution.

Question 2

A reasonable profit that is earned with conservative estimates is not considered to be an initial success for a new venture.

Accepted Answer

A) True 
 B)False

Question 3

______ is the volume of sales needed to cover total variable and fixed costs.

Accepted Answer

A) Cash flow 
B) Depreciation 
C) Revenue 
D) Breakeven 
A) Cash flow 
B) Depreciation 
C) Revenue 
D) Breakeven

Question 4

Rent and insurance are examples of variable costs.

Accepted Answer

A) True 
 B)False

Question 5

Negative cash flow:

Accepted Answer

A) results when cash receipts exceed cash payments. 
B) can cause a firm to fail. 
C) is included in the pro forma income statement. 
D) is common for a business during its phase of expansion. 
A) results when cash receipts exceed cash payments. 
B) can cause a firm to fail. 
C) is included in the pro forma income statement. 
D) is common for a business during its phase of expansion.

Question 6

The _____ method is the most popular method used to project cash flow.

Accepted Answer

A) direct 
B) indirect 
C) depreciation-adjusted 
D) present value method 
A) direct 
B) indirect 
C) depreciation-adjusted 
D) present value method

Question 7

Pro forma cash flow is

Accepted Answer

A) cash flow based on the actual. 
B) calculated from subtracting assets from liabilities. 
C) cash flow calculated on past receipts and expenses. 
D) projected cash inflow and outflow. 
A) cash flow based on the actual. 
B) calculated from subtracting assets from liabilities. 
C) cash flow calculated on past receipts and expenses. 
D) projected cash inflow and outflow.

Question 8

The cost of goods sold expense can be determined either by directly computing the variable cost of producing a unit times the number of units sold or by using an industry standard percentage of sales.

Accepted Answer

A) True 
 B)False

Question 9

Fixed expenses:

Accepted Answer

A) are incurred regardless of sales volume. 
B) can be estimated by taking into consideration the production. 
C) includes labor,raw materials,and commissions. 
D) must be linked to strategy in the business plan. 
A) are incurred regardless of sales volume. 
B) can be estimated by taking into consideration the production. 
C) includes labor,raw materials,and commissions. 
D) must be linked to strategy in the business plan.

Question 10

Capital budgets project expenditures on:

Accepted Answer

A) new equipment. 
B) future production costs. 
C) advertising. 
D) costs of goods solD. 
A) new equipment. 
B) future production costs. 
C) advertising. 
D) costs of goods solD.

Question 11

The contribution margin is:

Accepted Answer

A) Selling price minus variable cost per unit. 
B) Selling price minus total fixed costs. 
C) Variable cost per unit plus selling price. 
D) Selling price minus total costs. 
A) Selling price minus variable cost per unit. 
B) Selling price minus total fixed costs. 
C) Variable cost per unit plus selling price. 
D) Selling price minus total costs.

Question 12

Pro forma sources and applications of funds summarizes all the projected sources of funds available to the venture and how these funds will be disbursed.

Accepted Answer

A) True 
 B)False

Question 13

Depreciation is considered a source of funds because it does not represent an out-of-pocket expense.

Accepted Answer

A) True 
 B)False

Question 14

Break-even is that volume of sales at which there are neither profits nor losses.

Accepted Answer

A) True 
 B)False

Question 15

Equipment would be included on the balance sheet in which section?

Accepted Answer

A) current assets 
B) fixed assets 
C) retained earnings 
D) owner's equity 
A) current assets 
B) fixed assets 
C) retained earnings 
D) owner's equity

Question 16

An entrepreneur is trying to conduct a break-even analysis.Each product will sell for a price of $19.95.The entrepreneur has estimated the following costs:
A.Rent $1000 per month
B.Direct labor per unit will be $3 per unit
C.Salaries will be $500 per week
D.Raw materials will cost $1 per unit
Calculate the monthly breakeven point,show the formula,your work and identify the marginal contribution.
TFC = $3000 per month
VC = $4 per unit
SP = $19.95 per unit
MC = $15.95 per unit
B/E = 188 units per month

Accepted Answer

A.Rent $1000 per month
B.Direct labor pe

Question 17

The marginal contribution is defined as:

Accepted Answer

A) selling price per unit minus variable cost per unit 
B) total fixed costs minus selling price per unit 
C) variable cost per unit minus the selling price per unit 
D) total fixed costs plus total variable costs 
A) selling price per unit minus variable cost per unit 
B) total fixed costs minus selling price per unit 
C) variable cost per unit minus the selling price per unit 
D) total fixed costs plus total variable costs

Question 18

Which of the following would be an application of funds?

Accepted Answer

A) Decrease in assets. 
B) Increase in turnover. 
C) Paying dividends. 
D) Increase in liabilities. 
A) Decrease in assets. 
B) Increase in turnover. 
C) Paying dividends. 
D) Increase in liabilities.

Question 19

Using a spreadsheet software package is helpful when developing budgets as it helps to gauge the impact of different financial scenarios.

Accepted Answer

A) True 
 B)False

Question 20

Inventory is considered a source of funds because of the revenue it brings in.

Accepted Answer

A) True 
 B)False

The formula for break-even analysis is:

A reasonable profit that is earned with conservative estimates is not considered to be an initial success for a new venture.

______ is the volume of sales needed to cover total variable and fixed costs.

Rent and insurance are examples of variable costs.

Negative cash flow:

The _____ method is the most popular method used to project cash flow.

Pro forma cash flow is

The cost of goods sold expense can be determined either by directly computing the variable cost of producing a unit times the number of units sold or by using an industry standard percentage of sales.

Fixed expenses:

Capital budgets project expenditures on:

The contribution margin is:

Pro forma sources and applications of funds summarizes all the projected sources of funds available to the venture and how these funds will be disbursed.

Depreciation is considered a source of funds because it does not represent an out-of-pocket expense.

Break-even is that volume of sales at which there are neither profits nor losses.

Equipment would be included on the balance sheet in which section?

The marginal contribution is defined as:

Which of the following would be an application of funds?

Using a spreadsheet software package is helpful when developing budgets as it helps to gauge the impact of different financial scenarios.

Inventory is considered a source of funds because of the revenue it brings in.

Entrepreneurship and the Entrepreneurial Mind-Set

Entrepreneurial Intentions and Corporate Entrepreneurship

Entrepreneurial Strategy: Generating and Exploiting New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Intellectual Property and Other Legal Issues for the Entrepreneur

The Business Plan: Creating and Starting the Venture

The Marketing Plan

The Organizational Plan

Sources of Capital

Informal Risk Capital, Venture Capital, and Going Public

Strategies for Growth and Managing the Implication of Growth

Accessing Resources for Growth From External Sources

Succession Planning and Strategies for Harvesting and Ending the Venture

Filters

Exam 10: The Financial Plan

The formula for break-even analysis is:

A reasonable profit that is earned with conservative estimates is not considered to be an initial success for a new venture.

______ is the volume of sales needed to cover total variable and fixed costs.

Rent and insurance are examples of variable costs.

Negative cash flow:

The _____ method is the most popular method used to project cash flow.

Pro forma cash flow is

The cost of goods sold expense can be determined either by directly computing the variable cost of producing a unit times the number of units sold or by using an industry standard percentage of sales.

Fixed expenses:

Capital budgets project expenditures on:

The contribution margin is:

Pro forma sources and applications of funds summarizes all the projected sources of funds available to the venture and how these funds will be disbursed.

Depreciation is considered a source of funds because it does not represent an out-of-pocket expense.

Break-even is that volume of sales at which there are neither profits nor losses.

Equipment would be included on the balance sheet in which section?

The marginal contribution is defined as:

Which of the following would be an application of funds?

Using a spreadsheet software package is helpful when developing budgets as it helps to gauge the impact of different financial scenarios.

Inventory is considered a source of funds because of the revenue it brings in.

Entrepreneurship and the Entrepreneurial Mind-Set

Entrepreneurial Intentions and Corporate Entrepreneurship

Entrepreneurial Strategy: Generating and Exploiting New Entries

Creativity and the Business Idea

Identifying and Analyzing Domestic and International Opportunities

Intellectual Property and Other Legal Issues for the Entrepreneur

The Business Plan: Creating and Starting the Venture

The Marketing Plan

The Organizational Plan

Sources of Capital

Informal Risk Capital, Venture Capital, and Going Public

Strategies for Growth and Managing the Implication of Growth

Accessing Resources for Growth From External Sources

Succession Planning and Strategies for Harvesting and Ending the Venture

Filters