Business Foundations CH12 Test "FINANCIAL MGMT: ACCOUNTING"

All the income that a business receives during a period of time is called profit.

• True

• False

To prepare a budget, a company 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 company has adequate financial resources to pay bills as they come 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 status of each account.

• True

• False

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

• True

• False

Assets – Liabilities = Owner's Equity.

• True

• False

Most employees in most companies receive a weekly or monthly salary.

• True

• False

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

• True

• False

The company's liabilities divided by the owners' equity is the liquidity ratio.

• True

• False

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

• True

• False