11.1 Entrepreneurship Assessment

A financial document that summarizes a business's income and expenses over a given time period and shows whether the business made a profit or took a loss is called a(n)

• balance sheet

• cash flow statement

• income statement

How often should a small business prepare in come statements and cash flow statements?

• daily

• monthly

• yearly

Income statements include

• revenue, expenses, net income or loss

• revenue, assets, liabilities

• expenses, liabilities, net loss

The rate at which a business spends cash to cover overhead without earning income is called the

• cash flow rate

• burn rate

• overhead rate

If a business has $36,000 on hand and spends $3,000 a month on overhead, how long will it be able to stay in business without generating income?

• 6 months

• 10 months

• 12 months

An income statement does not show

• profits

• expenses

• cash on hand

The cash flow equation is

• cash inflow minus cash outflow equals net cash

• cash outflow minus cash inflow equals net cash

• net profit minus cash inflow equals net cash

To keep from being caught in a negative cash flow, you should

• keep inventory high.

• buy all your equipment rather than lease

• collect cash as soon as possible

Money received minus what is spent over a specified period of time is called

• profit

• cash flow

• net profit

The burn rate is the money a business needs each month to keep operating without income.

• true

• false