Financial Management - Chapter 17 (I2BUS)

A financial plan can be used to attract investors.

• True

• False

An audit is a collection, recording, and reporting of financial transactions.

• True

• False

A financial plan explains how a business will manage its records.

• True

• False

Everyone involved in a business should understand some of the basics of accounting.

• True

• False

A cash budget is a plan for the amount expected to be spent and earned over a given period of time.

• True

• False

The purpose of a financial plan is to:

• Project future income

• See if there is enough money to start the business

• Describe the assets that need to be purchased to start a business

• All of the above

The main reason start-up capital can be hard to obtain is because:

• There is no track record to prove the venture will be successful

• Money is scarce

• Assets are needed

• Of high interest rates

When preparing a financial forecast, it is best to keep estimates of:

• Income low and Expenses high

• Income high and Expenses low

• Both income and Expenses low

• Both Income and Expenses high

Unplanned growth:

• Yields unplanned income

• Can be rewarding

• Can be chaotic

• Builds a business faster

Operating expenses include:

• Remodeling costs

• Security deposits

• Utility bills

• Legal permits