POB - Ch. 12 - Financial Management - Test Review

All income that a business 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 operating budget will determine if a business has adequate financial resources on hand to pay bills as they become due or if it will need to borrow money.

• True
• False

An accounts receivable record identifies the companies from which credit purchases were made and the amount purchased, paid, and owed.

• True
• False

Sales and profits for a specific period are reported in a company's income statement.

• True
• False

Assets - Liabilities = Owner's Equity.

• True
• False

A majority of employees in most businesses receive a weekly or monthly salary.

• True
• False

Payroll taxes consist f 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

At the end of the period covered by a budget, the business will prepare new financial statements.

• True
• False