ITB Ch 12 Review

Which of the following is an example of a current liability?

• Long-term debt

• Accounts payable

• Owner's equity

• Fixed assets

What is the purpose of maintaining tax records? Mark only one oval.

• To track employee performance

• To ensure compliance with tax laws

• To manage inventory

• To develop marketing strategies

What is the basic financial equation for businesses?

• Revenue + Expenses = Profit or Loss

• Revenue - Expenses = Profit or Loss

• Revenue x Expenses = Profit or Loss

• Revenue / Expenses = Profit or Loss

Which financial statement reports a company's assets, liabilities, and owner's equity?

• Income statement

• Balance sheet

• Cash flow statement

• Profit and loss statement

What does the operating budget focus on?

• Initial costs of starting a business

• Long-term investments

• Ongoing operations for a specific period

• Employee salaries only

What is the purpose of a cash budget?

• To estimate future profits

• To track cash inflows and outflows

• To determine employee salaries

• To calculate taxes owed

Which of the following is a key component of payroll management?

• Inventory management

• Employee compensation

• Marketing strategies

• Customer service

What does the term 'net income' refer to?

• Total revenue

• Total expenses

• Revenue minus expenses

• Expenses minus revenue

What is the primary purpose of a start-up budget?

• To plan ongoing operations

• To estimate cash flow

• To plan income and expenses until the business becomes profitable

• To track employee payroll

Which financial performance ratio indicates how much a business relies on borrowed money?

• Current ratio

• Debt to equity ratio

• Return on equity ratio

• Net income ratio