BB42 Unit 5 Test

Which of the following is an example of business-related financial information?

• Accounts receivable record

• School-loan document

• Pay stub

• Sales receipt from purchasing a new mattress

Which of the following is an example of personal financial information?

• Pay stub

• Sales invoice

• Expense report

• Accounts payable record

A business wants to purchase new machinery for its production line. Which of the following pieces of financial information would be most relevant for their purchase decision?

• The amount of money left in the budget for the fiscal year.

• How much money the company spent on machinery five years ago.

• The amount of money spent by a competing company on production line equipment.

• The current salaries of top company executives.

Which of the following is a reason that businesses might look at financial information from another company?

• To see how their company compares to the competition.

• To determine how to increase sales.

• To monitor their company’s ongoing business activities.

• To manage their company’s debt.

Which of the following is the most likely reason why a manager would review financial information for her/his industry and compare his/her business's operating results with industry averages?

• To determine if the business is performing above or below average

• To calculate the business's percentage increase in net sales.

• To prepare a company budget for the following year.

• To determine the return on common stockholders' equity.

• Sales are steadily increasing.

• Cash flow continues to be tight.

• Accounts receivable exceed accounts payable.

• Capital assets are depreciating at a slower rate.

What is another way to describe financial information that is true, complete, and faithfully represented?

• Reliable

• Understandable

• Comparable

• Timely

What is the relationship between a business’s goals and its budget?

• Goals state the big picture and are unrelated to a detailed budget.

• Goals are established after the budget so that they are realistic.

• Budgets reflect real business activity while goals are usually unrealistic.

• Budgets translate a company’s goals into actual means for accomplishing them.

What is the benefit of having written records of financial transactions?

• Expenses are reduced, and income is increased.

• Accounting is simplified and less detailed.

• Information is accurate, accessible, and meaningful.

• Investments are increased, and profit is reinvested.

Why is it important for a business to budget a certain amount of money to savings?

• To satisfy customers.

• To avoid financial crisis.

• To pay stockholders.

• To prevent governmental control.