Business Essentials Unit 4 Review

The process of keeping the financial records of a business is known as

• accounting.

• controlling.

• financing.

• bookkeeping.

Checks, receipts, invoices, and purchase orders are examples of

• financial statements.

• department ledgers.

• source documents.

• accounting standards.

What accounting record would summarize a business’s profit or loss for a previous year?

• Income statement

• Balance sheet

• Bank statement

• Inventory record

Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:

• Balance sheet

• Cash flow statement

• Income statement

• Bank statement

Why are accurate accounting records important to a business?

• They give the business an image of success.

• They increase the return on investments.

• They show how the business is doing.

• They prevent any financial losses.

Finance is the business function that involves managing

• information.

• marketing.

• production.

• money.

The finance function would definitely be involved in a decision regarding

• public relations and publicity.

• new business projects and strategies.

• personal selling.

• hiring.

Which of the following is a capital investment decision:

• How to manage cash flow

• How to handle accounts payable

• How to manage inventory

• How to finance investments

The cash conversion cycle should be

• at equilibrium.

• on an upward trend.

• as short as possible.

• as long as possible.

Accounting is distinct from finance because its main focus is on

• record keeping activities.

• money management decisions.

• administration of assets.

• acquisition of funds.