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WorksheetsBusiness Foundations CH12 Test "FINANCIAL MGMT: ACCOUNTING"
Total questions: 48
Worksheet time: 39mins
All the income that a business receives during a period of time is called profit.
True
False
To prepare a budget, a company must be able to identify and predict the amount of each source of income and each type of expense.
True
False
An operating budget will determine if a company has adequate financial resources to pay bills as they come due or if it will need to borrow money.
True
False
An accounts receivable record identifies the companies from which credit purchases were made and the status of each account.
True
False
Sales, expenses, and profits or losses for a specific period are reported in a company's income statement.
True
False
Assets – Liabilities = Owner's Equity.
True
False
Most employees in most companies receive a weekly or monthly salary.
True
False
Payroll taxes consist of income taxes, Social Security, Medicare, and unemployment taxes.
True
False
The company's liabilities divided by the owners' equity is the liquidity ratio.
True
False
At the end of the period covered by a budget, the company will prepare new financial statements.
True
False
A business will make a profit if
expenses are greater than income
income equals expenses
income is greater than expenses
expenses decrease and income increases
When a business expands,
it is likely that employees will be laid off
marketing activities may be temporarily put on hold
profits will increase
new factories and equipment may be needed
For companies that have been operating for several years, the main source of budgetary information is
business magazines and newspapers
Internet
the company's financial records
the Small Business Administration
All of the following are private businesses that collect and publish financial information about similar businesses and industries, EXCEPT
Standard and Poor's.
Dun and Bradstreet.
the National Federation of Independent Business.
Value Line.
Which of the following is generally NOT a goal of a business budget?
predict the types and amounts of expenses for the business
determine the sources and amounts of income
determine how income will be distributed to cover expenses
convince employees to accept a large pay cut so the business can avoid bankruptcy
The first step in the budgeting process is
explain the budget to the people who need to make financial decisions
calculate each type of income, expense, and the amount of net income or loss
prepare a list of each type of income and expense that will be part of the budget.
gather accurate financial information
What type of budget is an estimate of the actual money received and paid during a specific period?
a cash budget
a final budget
an accounting budget
a balanced budget
An operating budget is generally planned for
three months.
six months.
one year.
all of the above time frames.
What type of financial records identify the amount by which assets have decreased in value due to age and use?
cash records
depreciation records
asset records
accounts payable records
In simple terms, __________________ are what a company owns.
profits
income
assets
owner's equity
Which of the following is usually NOT a long-term asset?
land
inventory
equipment
buildings
Income > Expenses = ____________
Assets
Liabilities
Owner's Equity
Net Income
An income statement generally covers
one week.
one to two years.
five years.
three to six months or less.
All of the following would be considered expenses EXCEPT
purchases of supplies.
interest earned on investments.
salaries paid to employees.
taxes.
Which of the following is NOT a common way companies pay employees?
monthly
weekly
biweekly
annually
Which of the following would NOT be considered a benefit?
unpaid vacation
a salary
health insurance
paid vacation
Employers must make contributions equivalent to
income taxes.
unemployment taxes.
FICA taxes (Social Security and Medicare).
all of the above
Most companies include a ________ with the employee's paycheck; this document generally includes information for the current pay period as well as year-to-date amounts.
payroll record.
earnings report or pay stub
financial report
income statement.
This shows how much profit is being made for every dollar of sales during the analyzed period.
return on equity ratio
debt to equity ratio
current ratio
net income ratio
The final step in the financial decision-making process is
make the necessary adjustments to the budget.
examine the budget for discrepancies.
check if income and expenses are meeting the budgeted amounts.
prepare a budget.
The costs of operating a business are called ____________.
A detailed plan for the financial needs of a business is called (a) .
A (a) budget plans the income and expenses from the start of a new business or a major business expansion until it becomes profitable.
A(n) (a) budget describes the financial plan for the ongoing functions of the business during a specific period.
(a) records are financial records that name the buildings and equipment owned by the company, their original and current value, and the amount owed if money was borrowed to purchase them.
Records of ____________ identify all purchases and sales made using credit.
(a) records identify the type and number of products on hand for sale.
A company reports its assets, liabilities, and owner's equity on the (a) sheet.
(a) assets include cash and those items that can be easily converted into cash.
A (a) is the financial record of employee compensation, deductions, and net pay.
Owners must pay (a) -employment taxes, which are contributions to Medicare and Social Security.
With (a) deposit, an employer electronically transfers the net payment to an employee's bank account.
Financial performance (a) are comparisons of a company's financial elements that indicate how well the business is performing.
A (a) is a difference between actual and budgeted performance.
What are the two main purposes of a business budget?
Name and briefly describe each element that is recorded in a balance sheet. What elements are recorded on the left side? The right side?
What is a payroll record? What information is included in a payroll record?
How is the return on equity ratio calculated? What does it show and to what should it be compared?
