WorksheetsUnit 4 ENV Test Review
Total questions: 50
Worksheet time: 38mins
Name
Class
Date
1.
A litmus test for profitability is the ________.
a)
Optional features
b)
Economics of one unit (EOU)
c)
The money borrowed (IOU)
d)
A focus on quality
2.
What is the estimated time required to earn sufficient net cash flow to cover the start-up investment?
a)
Recovery period
b)
Repayment estimate
c)
Net cash flow period
d)
Payback period
3.
Carla sells hot coffee, cider and tea from a sidewalk cart near Wall Street in New York City. Last month she sold $4,500 worth of product to 1,000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: Utilities = $100, Salary = $2,000, Advertising = $0, Insurance = $0, Interest = $0, Rent (cart
a)
3500
b)
3000
c)
2700
d)
2000
4.
Fixed Operating Costs ________.
a)
Include expenses like the DSL bill and rent
b)
Are not included in COGS
c)
Are not direct costs of creating each product
d)
All of the above.
5.
Which two categories below are used for business costs?
a)
Gross and net
b)
Materials and labor
c)
Pre-tax and after-tax
d)
Fixed and variable
6.
Which of the following is not a category of fixed costs?
a)
Raw materials
b)
Capital
c)
Depreciation
d)
Utilities
7.
If you sell $2,500 of product, pay COGS of $800 and other variable costs of $450, what is your contribution margin in dollars?
a)
2050
b)
1700
c)
1250
d)
2450
8.
Which of the following would be a start-up cost for an internet business?
a)
A URL
b)
Computers
c)
Licenses
d)
All of the above
9.
There are two categories of variable costs: ________.
a)
Cost of goods sold and other variable costs
b)
Gross costs and net variable costs
c)
Gross variable costs and net costs
d)
Net variable costs and cost of goods sold
10.
If a business has total gross profit of $14,720 and total operating costs of $11,500, what is its total profit?
a)
3220
b)
1150
c)
3000
d)
26220
11.
A cash reserve is also known as a(n
a)
Pool of cash resources
b)
Contingency fund
c)
Emergency fund
d)
All of the above
12.
An example of a service business's unit of sale would be one ________ of service.
a)
Gross
b)
Dozen
c)
Crate
d)
Hour
13.
Jared analyzed the income statement for his independent label and found that for every dollar of sales, 30 cents was spent on cost of goods sold. The gross profit per dollar was 70 cents. If 20 cents was spent on operating costs and 10 cents on taxes, what is the net profit per dollar?
a)
60 cents
b)
30 cents
c)
50 cents
d)
40 cents
e)
70 cents
14.
Ideally, you want to have a positive "double" bottom line. This means ________.
a)
You have twice the profit that you expected
b)
You are achieving a profit and meeting your mission
c)
You have twice the number of customers that you expected
d)
All of the above
e)
None of the above
15.
Growth of ________ is a good way to measure company success.
a)
Long-term debt
b)
Liabilities
c)
Owner's equity
d)
Cash
e)
None of the above
16.
An older term used for the income statement is the ________.
a)
Liabilities report
b)
Profit and loss statement
c)
Cash flow analysis
d)
Balance sheet
e)
None of the above
17.
If you invest $1,525,000 in a business and earn a return of $775,000, what is your ROI?
a)
0.37
b)
0.51
c)
0.45
d)
0.57
e)
0.42
18.
ROI is always calculated for ________.
a)
Ever
b)
The length of a business's fiscal year
c)
A specific time period, such as a month or a year
d)
A month
e)
None of the above
19.
Liabilities that will be paid over a period of more than one year are ________.
a)
Long-term assets
b)
Long-term liabilities
c)
Current liabilities
d)
Equity
e)
None of the above
20.
In the income statement, gross profit minus fixed operating costs equals ________.
a)
Pretax profit
b)
Margin
c)
COGS
d)
Gross profit
e)
Net profit
21.
Successful entrepreneurs use their financial records to prepare ________ income statements that show sales and costs for the previous period.
a)
Yearly
b)
Quarterly
c)
Biannually
d)
Monthly
e)
None of the above
22.
The legal structure you decide on will affect the taxes you pay. However, certain administrative tasks will be the same for all legal structures and include ________.
a)
A. Obtaining a sales and use tax registration number from the state
b)
B. Obtaining a federal identification number for the company that you can use in all interactions with the federal government
c)
Both A and B
d)
Filing articles of incorporation
e)
None of the above
23.
Entrepreneurs should always ________.
a)
Avoid expenses
b)
Pay self-employment tax
c)
Ask to be audited by the IRS
d)
Keep records, file returns, and pay taxes on time
24.
Failure to file and pay income tax is a criminal offense called tax ________.
a)
Shirking
b)
Avoidance
c)
Elusion
d)
Evasion
e)
Fraud
25.
The present value of money is based upon the value of your "next-best" opportunity for investment at a particular ROI. If this value is 10%, it is better to get $10,000 at the end of the first year than ________ today.
a)
10000
b)
9500
c)
8800
d)
All of the above
e)
None of the above
26.
A(n
a)
Annual
b)
Accrued
c)
Monthly
d)
Compound
e)
Quarterly
27.
To manage cash flow, you should ________ and then subtract expenses you expect to incur.
a)
Project gross sales
b)
Project gross liabilities
c)
Project net income
d)
Project cash receipts
e)
Project gross receipts
28.
Why is it not a good idea to rely on your income statement to run your business?
a)
The income statement adds noncash expenses back to the business's earnings.
b)
The income statement records cash when it comes into the business.
c)
The income statement deducts noncash expenses, such as depreciation, even when no cash is actually flowing out of the business.
d)
All of the above
e)
None of the above
29.
Land or buildings that are bought and sold represent a class of investment called ________.
a)
Real estate
b)
Money market accounts
c)
Stock
d)
Mutual funds
e)
Bonds
30.
If an investment is not risky, the reward, the potential return, will probably be ________.
a)
Around 15%
b)
High
c)
Low
d)
Around 75%
e)
Around 20%
31.
Financing with earnings is an option under what circumstances?
a)
A company is profitable and has negative cash flow from operations.
b)
A company has no debt and is growing.
c)
A company is profitable and has positive cash flow from operations.
d)
A company needs debt to survive.
e)
None of the above
32.
If you take out a loan for $2,000 at an annual interest rate of 10%, how much interest will you pay each year?
a)
10
b)
200
c)
20
d)
100
e)
None of the above
33.
Venture capitalists can make their money by ________.
a)
Waiting until the company "goes public" and converting their shares into stock, which can then be traded on the stock market
b)
Selling their percentage share of the business to another investor
c)
Either of the above
d)
Neither of the above
34.
Fernando plans to sell hot coffee, cider and tea from a sidewalk cart near Wall Street in New York City. Each month he expects to sell $20,000 of product to 4,000 customers. He spent $4,000 on buying his beverage and supplies in bulk for the first month. The rental deposit on the cart was $4,000 and Fernando spent $500 to customize it. He bought a laptop, printer and software for $1,000 and paid a total of $1,000 for licenses. He has $500 in petty case for start up. His monthly costs are: Utilities = $500, Salary = $4,000, Advertising = $0, Insurance = $500, Interest = $0, Rent (cart
a)
14000
b)
18000
c)
11000
d)
12500
35.
If you sell $2,500 worth of product, pay COGS of $800 and other variable costs of $360, what is your gross profit?
a)
2140
b)
1700
c)
1340
d)
2464
36.
Jarvis is starting a business requiring initial start-up of $5.5 million. The business is projecting a net cash flow per month of $100,000. How many months will it take to make back his start-up investment?
a)
20
b)
5.5
c)
55
d)
None of the above
37.
If you sell $2,500 of product, pay COGS of $800 and other variable costs of $450, what is your contribution margin in percentage form?
a)
0.333
b)
0.203
c)
0.255
d)
0.5
38.
A business's operating ratios are computed by ________.
a)
Expense/sales
b)
Income/sales
c)
Expense/cost of goods sold
d)
Cost of goods sold/sales
e)
None of the above
39.
Which of the following is not something that can be invested?
a)
Energy
b)
Time
c)
Expertise
d)
Money
e)
All of the above
40.
How would you express a ratio as a percentage?
a)
Divide it by 100
b)
Multiply it by 100
c)
Add a percentage sign
d)
Subtract 100
e)
This is impossible to do.
41.
Orders are not entered onto the cash flow statement as cash receipts because you ________.
a)
Will have a more accurate cash flow statement if you enter them once a month
b)
Don't get the cash until the customer actually pays for the order
c)
Might get them confused with revenue on the income statement
d)
All of the above
e)
None of the above
42.
Businesses typically sell for several times their income, because the future stream of income is being sold. The price of the business is its ________.
a)
Past value
b)
Five time earnings
c)
Value prior to start-up
d)
Present value
e)
Future value
43.
Bonds are a form of ________.
a)
Partnership
b)
Equity financing
c)
Ownership financing
d)
Debt financing
e)
None of the above
44.
An investor who invests money into your business in exchange for equity receives ________.
a)
Headaches
b)
A share of ownership of the business
c)
Liability for any debt the business incurs
d)
Bonds
e)
A monthly dividend out of the business profits
45.
You should keep reserves of at least ________ and ________.
a)
3 months of fixed operating costs, one half of the start-up investment
b)
3 months of fixed operating costs, 3/4 of the start-up investment
c)
6 months of fixed operating costs, one half of the start-up investment
d)
One year of fixed operating costs, one half the start-up investment
46.
Entrepreneurs use a(n
a)
Liabilities list
b)
Balance sheet
c)
Balance report
d)
Cash flow statement
e)
Income statement
47.
Make your life easier at tax time by keeping ________.
a)
High net income
b)
A good working capital figure
c)
High long-term liabilities
d)
Operating ratios
e)
Complete financial records
48.
Legal reduction in taxes is called ________.
a)
Tax abatement
b)
Tax cheating
c)
Tax evasion
d)
Tax planning
e)
Tax avoidance
49.
Overhead is another term for ________.
a)
Fixed operating costs
b)
Net costs
c)
Seed capital
d)
Management
50.
In a business formula such as Return on Investment, "on" means ________.
a)
"On top of"
b)
"Instead of"
c)
"Divided by"
d)
"Deducted from"
e)
None of the above
100 %
