Business Finance Chapter 3

An individual or organization that provides funds to a business, to be repaid a future date is

• a creditor

• an investor

• a loan shark

• a fool

The amount paid for the privilege of borrowing money is called

• interest

• rate of return

• cash flow

• operating budget

An asset promised by a business to a creditor if repayment of a loan isn't completed

• interest

• owner's equity

• collateral

• goodwill

Identifies the assets, liabilities, and equity of a business as of a specific date.

• income statement

• cashflow statement

• balance statement

• owner's equity

A decline in the value of an asset as it ages is known as

• devaluation

• depreciation

• recission

• a bummer

Which of these are assets?

• cash, land and capital equipment

• mortgage

• retained earnings

• interest

How can you find a company's net income?

• Sales revenue plus cost of sales, expenses, interest, taxes

• income = cost of sales and operating expenses

• Sales revenue minus cost of sales, expenses, interest, taxes

• assets = liabilities + owner's equity

Tom borrows $5,000 at 5% simple interest. At the end of 5 years, how much interest will he have paid?

• $1,250

• $25,000

• $2,500

• $5,000

Which of these can be found in the owner's equity section of a balance sheet?

• cash, building and equipment

• mortgage and accounts payable

• capital surplus, stock & retained earningsThis is a correct answer

• none of these