Lesson 10 Financial Statements

Entrepreneurs should prepare income statements

• daily

• monthly

• quarterly

• yearly

In an income statement, subtracting the cost of goods sold from the net sales provides the

• revenue

• net operating income

• gross profit

• net income

A cost of goods sold section is included in a

• merchandising business income statement

• service business income statement

• cash flow statement

• balance sheet

An entrepreneur should prepare a cash flow statement

• daily

• monthly

• quarterly

• yearly

The rate at which the business needs to spend cash to cover overhead costs before beginning to generate a positive cash flow is called the

• start-up rate

• overhead rate

• cash flow rate

• burn rate

The cash flow equation is

• Cash Outflow – Cash Inflow = Net Profit

• Cash Outflow – Cash Inflow = Gross Profit

• Cash Inflow – Cash Outflow = Net Cash

• Cash Inflow – Cash Outflow = Net Profit

A balance sheet includes

• assets

• liabilities

• owner’s equity

• all of the above

The amount owed by a business to its suppliers for credit purchases is called

• accounts receivable

• accounts payable

• merchandise payable

• purchases on account

Owner’s equity is calculated by

• subtracting total liabilities from total

  assets

• dividing total liabilities by total assets

• subtracting total assets from total

  liabilities

• dividing total assets by total liabilities

Which of the following is not a current liability?

• accounts payable

• mortgage

• bank loan

• collected state sales taxes