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WorksheetsUnit 6 Review
Total questions: 60
Worksheet time: 30mins
An example of a fixed expense is
salaries
utilities
rent
all of the above
The variable expense that is associated with each unit of sale is called
UR
COGS
OFX
I SAID UR
The cost reduction made possible by spreading a business's costs over a larger volume of purchases is called
economy of scale
buying in bulk
volume discount
amortizing
An example of a typical variable expense is
yearly rent
Internet access
a commission for salespeople
the cost of electricity
A unit of sale is
the basic building block of your business
what a customer actually buys from you
the amount of product or service you use to calculate your costs and profit
all of the above
The amount per unit that a product contributes toward a business's profit before fixed expenses are subtracted is the
contribution margin
EOU
unit of sale
economy of scale
In a wholesale business, the cost of goods sold does not include
materials
shipping and handling
labor
commissions
In a service business, which of the following does not apply?
EOU
COGS
contribution margin
variable expenses
A retailer that sells sweaters would typically use a unit of sale based on
one sweater sold to a customer at the sale price
one dozen sweaters bought from the manufacturer
one sweater sold to a customer at the regular price
one dozen sweaters bought from the wholesaler
A manufacturer and a wholesaler both would include which of the following calculating economics of one unit?
labor and materials
variable expenses
shipping and handling
commissions
Salaries and utilities are examples of variable expenses.
T
F
Shipping and handling charges are examples of variable expenses
T
F
An example of a fixed expense is
rent
utilities
salaries
all of the above
A situation in which a "fixed" expense might change would be
electric rates that fluctuate depending on the season
changing your packaging to be more environmentally friendly
sending packages overseas
monthly commissions to salespeople during holidays
A business can reduce expenses by
extending credit to consumers to boost sales
buying used equipment instead of new equipment
buying a company vehicle instead of leasing it
hiring a few full-time employees instead of many part-timers
The rate at which a business is spending cash to cover overhead without making sales is its
cash flow rate
operating rate
burn rate
overhead rate
A cash budget includes
depreciation costs for equipment
orders placed by customers but not paid for as yet
the company's entire credit history
all cash inflows and outflows
If a business has $36,000 on hand and spends $3,000 a month on overhead, how long will it be able to stay in business without generating income?
12 months
8 months
10 months
6 months
To keep from being caught with negative cash flow, you should
keep inventory levels low
calculate your cash balances every day
encourage customers to pay in cash
all of the above
When a business has sold exactly enough units to cover expenses, it has reached the
break-even point
equilibrium ratio
equilibrium price
all of the above
A company has a break-even point of 1,000 units, and sold 750 units. Did the company cover its expenses?
no, it needs to sell 500 more units to cover expenses
yes, because the sales equal $1,000
no, it needs to sell 250 more units to cover expenses
no, it sold 75% of the amount required to cover expenses
Depreciation expense is usually calculated
yearly
quarterly
every two years
monthly
Fixed business expenses are those expenses that will never change.
T
F
Managing expenses involves a two-step process of knowledge and action.
T
F
Which of the following are potential revenue streams for a popular web series airing on YouTube
syndication
advertising
sponsorship
all of the above
The sales forecasting technique in which you predict selling as many products as you can is called
order projecting
full capacity
target selling
market share
Which of the following is not helpful in sales forecasting?
researching industry standards
developing a savings plan
observing the competition
estimating market share
An income statement is also called a
sale forecast
cash flow statement
balance sheet
profit and loss statement
On an income statement, gross profit is calculated by
subtracting the cost of goods sold from the net sales
adding the cost of goods sold to the total revenue
subtracting the cost of goods sold from the operating expenses
adding the cost of goods sold to the pre-tax profit
An income statement does not show
expenses
cash on hand
taxes
profits
If your pre-tax profit is $4,250 and your tax rate is 25%, your net profit is
$4,000.00
$2,500.00
$3,187.50
$3,528.00
If you pay yourself monthly a salary to run your business, that salary is entered on the income statement as
fixed expense
variable expense
pre-tax profit
net profit
Sara is a wedding makeup artist who worked 16 weddings last month for $250 each. Her COSS is $120 so her gross profit last month was
$2,080
$3,460
$1,600
$2,500
A business should only generate one revenue stream at a time.
T
F
A sales forecast is a prediction of the amount of commission a sales force will earn over a period of time.
T
F
Proportional scaling is a sales forecasting technique
T
F
The one-time sum required to set up a business and cover its start-up expenditures is called
start-up capital
seed money
start-up investment
all of the above
An emergency fund is the amount of cash reserve that a business should keep during its
first month to two months of operations
first three months to six months of operations
first year of operations
first month of operations
If the start-up expenditures for a business are $5,000, the fixed costs for one month are $3,000, and the emergency fund is $2,500, what is the total start-up investment needed to open the business?
$10,500
$7,500
$5,000
$16,500
If a business's net profit per month is $12,000 and the start-up investment is $48,000, what is the payback?
25 month
4 months
2 months
6 months
If a business's net profit is $20,000 and initial investment is $100,000, what is the return on investment?
20%
5:1
1:5
500%
Borrowing money to start a new business is called
debt financing
green financing
equity financing
all of the above
Entrepreneurs commonly turn to which of the following for debt financing is
angels
banks
venture capitalists
new partners
If your monthly income is $8,000 and your monthly debt payments are $6,000, your bank debt ratio is
75%
1.33%
7.5%
133%
A good bank debt ratio is typically
50%
60%
70% or more
40% or less
Financing a business by selling shares of ownership in the business is called
debt financing
equity financing
green financing
all of the above
Entrepreneurs can turn to which of the following for equity financing?
venture capitalists
credit unions
banks
all of the above
If a company's start-up expenditures are $10,000, its emergency fund is $5,000, and its fixed expenses for a month are $3,000, its total start-up investment is $18,000.
T
F
Which of the following is a current asset?
equipment
inventory
furniture
buildings
Owner's equity is calculated by
adding assets to liabilities and subtracting profit
subtracting total liabilities from total assets
subtracting total assets from total liabilities
adding assets to liabilities
The term in accounting that refers to the investment or ownership value of a business is
liability
asset
owner's equity
capital
Which of the following is a current liability?
bank loans
accounts payable
state sales tax
all of the above
Same-size analysis compares data that has been converted to
sums
fractions
percentages
differences
If a company’s expenses are $20,000 and sales are $400,000, what is its operating ratio?
2%
5%
20
50%
If a company’s net profit is $40,000 and sales are $500,000, what is its return on sales?
12.5%
1.25%
8%
125%
A very low return on sales indicates
very high volume
very low price
very high price
A or C
If a business has $20,000 in debt and $100,000 in total assets, what is its debt ratio?
20%
2%
200%
500%
If a business’s current assets are $500,000 and current liabilities $250,000, what is its current ratio?
20%
2%
1:2
2:1
Another term for the balance sheet is the income statement.
T
F
The balance sheet shows the worth of a business over a period of time.
T
F
