Font size
WorksheetsPBMF: 17.1A Finance & Accounting Transactions
Total questions: 26
Worksheet time: 31mins
The finance function of business includes all activities that involve money. Finance is one of the four functions of business. An important part of finance is planning. Financial planning is the process of setting financial goals and developing plans to reach them. Business goals can be short-term or long-term and should be written as SMART goals.
The primary goal of business is to generate revenue. Revenue is the earnings that a business receives for the goods and services it sells. Successful businesses have three core goals. Each relates to generating adequate revenue:
Pay debts. Banks and others who have extended credit to the business must be paid. These debts must be paid on time.
Provide return for investors. Those who have a stake in a business expect to get returns on their investments.
Finance future growth. For a business to continue, money must be available to finance future growth.
Which of these is NOT a core goal of successful businesses?
Pay Debts
Provide Return for Investors
Finance Future Growth
Financial planning is the process of setting (a) goals and developing (b) to reach them.
The primary goal of business is to generate (a) .
Match each word or phrase to the correct definition.
the costs involved in operating a business
expenses
the difference between the income earned and expenses incurred by a business during a specific period of time.
profit
a process used to manage the financial resources of a business
financial management
Accounting is the (a) of recording business (b) and (c) , verifying, and reporting the (d) .
What is the purpose of accounting?
To keep records of transactions.
To create financial statements and reports on a regular basis.
Accounting is often called the language of business.
True
False
Who uses accounting information?
(Choose all that apply)
taxing authorities
managers
lending institutions
The rules, standards, and practices businesses follow to record and report financial information is called ____.
An (a) is a review of the financial statements of a business and the accounting practices that were used to produce them.
Business financial records (a) be kept (b) from the owner’s personal financial records.
A fiscal period is the period of time for which a business summarizes accounting information and prepares financial statements. It may also be called an _____.
accounting period
For tax purposes, most businesses use _____ as the fiscal period.
one week
two years
one year
one month
Under the cash-basis accounting, revenue (a) recorded until cash is received. Expenses are not recorded until (b) . Usually, only (c) service businesses use the cash-basis method.
Under the accrual-basis accounting, revenues and expenses are recorded (a) . (b) businesses use the accrual-basis method. Any business that (c) must use accrual-basis accounting.
Match each word or phrase to the correct definition.
a financial plan that reflects anticipated revenue and shows how it will be allocated in the operation of the business
budget
monitoring costs to stay within the planned budget
cost control
the difference between the budgeted amount and the actual amount.
discrepancy
Budgets are typically created by (a) of a business and then (b) to create the overall company budget.
Which of these is NOT a common budget used in financial planning?
sales forecast
petty cash budget
start-up
cash budgets
The _____ budget is the projected sales units and revenue dollars for the period.
sales forecast
A sales forecast is ___
a prediction of future sales based on past sales.
Information for the budget is obtained from the (a) financial statements that were created for the business plan.
Match each type of budget with the correct definition.
a projection of the sales revenue that will be earned and the expenses that will be incurred during a future period of time
operating budget
used to estimate the amount of money coming into and going out of the business
cash budget
budget created in the planning stages for a new business
start-up budget
The accounting equation is the foundation of all accounting records. The accounting equation is stated as:
(a) = (b) + (c)
Match each word or phrase with the correct definition.
debts owed to others
liabilities
difference between the assets of a business and its liabilities
owner's equity or net worth
property or items of value a business owns
assets
Source documents are records that prove a business transaction occurred.
Which of these are listed in your textbook as examples of source documents?
invoices
purchase orders
A sale on account is a transaction for which cash for the sale is received (a) . These transactions are usually a business- to-business (B2B) customer. A (b) is sent to the customer and a copy is kept for the business. The customer account is known as an (c) . Accounts receivable are considered (d) .
A _____ is a transaction for which merchandise purchased is paid to the vendor at a later date.
purchase on account
Match each word or phrase with its corresponding definition.
when a business pays cash for merchandise
cash purchases
assortment or selection of items that a business has on hand at a particular point in time
inventory
vendor account
account payable
the costs involved in operating a business
expenses
