WorksheetsUnit 3 Finance Exam practice
Total questions: 30
Worksheet time: 29mins
Revenue Expenditures are
external sources of finance from financial institutions
when a business sells off its unwanted or unused assets to raise funds.
money spent on the day-to-day running of the business, such as rent or insurance.
money spent on acquiring fixed assets for the business, such as machinery or buildings
Revenue is
total sales - cost of goods sold
price x the # of units sold
price x contribution per unit
Which of the following are medium-term sources of finance?
Trade credit
Overdraft
Leasing
Grants
Debt factoring
Capital Expenditures are
money spent to acquire fixed assets for a business, such as machinery, land or buildings.
money spent on the day-to-day running of the business, such as wages or insurance.
an external source of finance from a financial institution
when a business sells off its unwanted or unused assets
Which of the following are internal sources of finance?
Loans
Sale of Assets
Personal savings
Overdrafts
What is retained profit?
profit that remains after a business has paid corporation tax to the government and dividends to shareholders
money raised from the sale of share of a limited company (when a business "goes public")
a source of finance for sole traders that comes mostly from their own personal savings
the portion of profit that the government takes from a business's revenue
What are direct costs?
are costs that can be clearly attributed to the production of specific goods or services, such as raw materials
costs that have the same set amount from month-to-month, such as a rent payment.
are costs that are not ties to production but directly pay for overhead, such as the executive's salary.
Which of the following is the calculation for contribution per unit?
price per unit - variable cost per unit
variable cost per unit X contribution per unit
profit - fixed costs
price per unit - fixed costs per unit
Which of the following is an example of a semi-variable cost?
Rent
Water bill
Salesperson salary + commission
Interest on loans
This source of finance allows a business to "buy now and pay later." The seller usually allows between 30-60 days for payment.
Grant
Overdrafts
Trade Credit
Subisidies
Businesses can sell they unused assets, such as selling an old building or computer equipment, as a way to raise capital. Choose the correct source AND category of finance.
Sale of Assets - Internal
Share Capital - Internal
Sale of Assets - External
Share Capital - External
These type of costs, are also known as "overhead". Examples are advertising expenses, accounting fees and janitorial fees.
Direct
Fixed
Indirect
Semi-variable
Which of the following in the correct calculation for profit?
Cash inflow-Cash outflow
Sales revenue - Total costs
Total Costs / # of units sold
A positive cash flow means that a business can meet their day-to-day operating costs.
True
False
Patents, goodwill, and trademarks are all examples of:
Equity
Cash inflows
Intangible assets
You will find assets, liabilities and owner's equity on which financial statement
Cash flow forecast
Balance sheet
Profit & Loss Account (Income Statement)
The money document
Cost of goods sold (COGS) would be found on which financial statement?
Cash flow forecast
Balance sheet
Profit & Loss Account (Income statement)
The money document
Sales Revenue or Total Revenue would be found in which financial statement
The money document
Cash flow forecast
Balance sheet
Profit & Loss Account (Income Statement)
This financial statement is "a snapshot of the financial position of a firm and is used to calculate a firm's net worth."
Cash flow forecast
Balance sheet
Profit & Loss Account (Income Statement)
The money document
The calculation for working capital is:
Total current assets - Total current liabilities
Fixed assets - liabilities
Profit - dividends
"________" may use the financial statements to negotiate better cash or credit terms with other firms.
Suppliers
Customers
Employees
Financiers
"__________" may use the financial statements to check the creditworthiness of the business.
Suppliers
Customers
Employees
Financiers
This is a measure of the profit that remains after deducting all costs from the sales revenue.
Gross profit
Net profit
Capital employed
This efficiency ratio assesses the ability of a firm to pay off its short-term debt obligations.
Net profit margin
ROCE
Current ratio
Acid test ratio
The category "Stock" on the Balance Sheet refers to
Shares of ownership in the company
Inventory on hand
Which of the following best describes Insolvency?
When a business can be profitable but have little or no cash.
When a business sells off all of its assets to pay debts owed
When a business has an unforeseen equipment failure
Debt factoring refers to
Funding provided by government that does not have to be paid back.
Fluctuating interest rates that could affect borrowing.
Companies purchasing the outstanding invoices of a firm, thereby providing immediate cash.
If a firm were to negotiate with creditors to extend it's trade credit (or when it has to pay back its debts), it would likely have the following effect:
Reduce cash outflows
Increase cash inflows
Calculate the payback period:
A commercial construction company plans on investing $200,000 in a new cement-mixer. The new machine will generate $50,000 in annual cash flow.
2.5 years
4 years
5 years
Which of the following best describes liquidity:
how quickly a company can earn profit
how quickly an asset can be converted into cash.
how quickly you can buy a fixed asset
