Chapter 12 Exam

Name

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

• 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

Payroll taxes consist of 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

A business will make a profit if

• revenue equals expenses
• revenue is greater than expenses
• expenses decrease & revenue increases
• expenses are greater than revenue

When a business expands,

• profits will increase
• employees will likely be fired
• marketing activities can temporarily be put on hold
• new factories & equipment may be needed

For long-established businesses, the main source of budget information is

• the business's financial records
• the Internet
• the Small Business Administration
• business magazines and newspapers