Chapter 12 - Principles of Business and Marketing

All income that a businenss receives over a period of time is called profit.

• True

• False

To prepare a budget, a business must be able to identify and predict the amount of each source of income and each type of expense.

• True

• False

An accounts receivable record identifies the companies from which credit purchases were made and the status of each account.

• True

• False

Assets - Liabilities = Owner's equity.

• True

• False

Payroll taxes consist of income taxes, Social Security, Medicare, and unemployment taxes.

• True

• False

The company's liabilities divided by the owner's equity is the current ratio.

• True

• False

A business will make a profit if

• Expenses are greater than revenue

• revenue is greater than expenses

• expenses decrease and revenue increases

• revenue equals expenses

For businesses that have operated for several years, the main source of budget information is

• The Internet

• the Small Business Administration

• business magazines and newspapers

• the business's financial records

When a business expands,

• profits will increase

• employees will likely be fired

• new factories and equipment may be needed

• marketing activities can be put on hold temporarily

The first step of the budgeting process is to

• explain the budget to people who need to make financial decisions

• gather accurate financial information

• calculate each type of income, expense, and the amount of net income or loss

• prepare a list of each type of income and expense that will be part of the budget