Unit 6 Business Finance

An example of a liquid asset is

• Inventory

• Real estate

• Money in the bank

• A piece of equipment

GAAP can be described as

• standards that are written and regulated by the government

• legally required that all companies meet GAAP standards

• Companies that meet GAAP standards usually use cash basis accounting

• GAAP recommends accrual basis accounting

Regarding accounting equations, assets are equal to two things

• Debits + equity

• Debits + accounts

• Liabilities + equity

• Liabilities + accounts

The costs of running a business are called

• Startup costs

• Cash flow

• Operating expenses

• Fixed costs

If you wanted to make sure a company has enough money available to pay its bills, which financial statement would be most helpful?

• Balance sheet

• Income statement

• Statement of owners' equity

• Cash flow statement

If you want to know whether a company had a profit or a loss during a specific period of time, which financial statement would be most helpful?

• Statement of owners' equity

• Cash flow statement

• Balance sheet

• Income statement

If your company uses accrual basis accounting, what do you need to pay special attention to?

• Money the company owes

• Money that is owed to the company

• Cash flow

• Revenue

An example of a tip that can hurt your cash flow is

• Increase your sales

• Pay your bills early

• Keep a cash reserve

• Offer credit only to low risk borrowers

An opportunity cost of an investment is

• The combined values of the other opportunities available

• The value of the next most valuable opportunity

• The marginal benefit of the investment

• The volatility of the investment

A type of liability would be

• A revenue stream

• A liquid asset

• Accounts payable

• Accounts receivable