Question 1

"Variable expenses" are costs that are expected to remain constant over a range of revenues for a specific time period.

Accepted Answer

A) True 
 B)False

Question 2

"Gross earnings" is equal to:

Accepted Answer

A)  Revenue - After-Tax cost of financial capital used 
B)  net income ÷ sales 
C)  net sales - the cost of production) × tax rate 
D)  net sales - the cost of production 
A)  Revenue - After-Tax cost of financial capital used 
B)  net income ÷ sales 
C)  net sales - the cost of production) × tax rate 
D)  net sales - the cost of production

Question 3

"Contribution profit margin" is the portion of the sale of a product that contributes to covering the cash fixed costs.

Accepted Answer

A) True 
 B)False

Question 4

The balance sheet equation states that total assets =

Accepted Answer

A)  total liabilities + depreciation 
B)  total liabilities + owners' equity 
C)  owners' equity + net income 
D)  owners' equity + current liabilities 
E)  total liabilities + net income 
A)  total liabilities + depreciation 
B)  total liabilities + owners' equity 
C)  owners' equity + net income 
D)  owners' equity + current liabilities 
E)  total liabilities + net income

Question 5

Cash or other assets that are expected to be converted into cash in less than one year are known as current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Financial statement that shows how cash, as reflected in accrual accounting, flows into and out of a company during a specific period of operation is called the:

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of retained earnings 
D)  statement of cash flows 
A)  income statement 
B)  balance sheet 
C)  statement of retained earnings 
D)  statement of cash flows

Question 7

Assets are financial and physical items controlled or owned by the business.

Accepted Answer

A) True 
 B)False

Question 8

Net cash burn occurs when the sum of cash flows from operations and investing is positive.

Accepted Answer

A) True 
 B)False

Question 9

During the development stage in a new venture's life cycle, the income statement typically shows no sales but expenses such as rent, utilities, and a subsistence salary for the entrepreneur.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a use of cash?

Accepted Answer

A)  a decrease in inventory 
B)  an increase in accrued liabilities 
C)  the sale of an asset for a gain 
D)  a drop in the amount owed on a bond 
E)  an increase in stock issued 
A)  a decrease in inventory 
B)  an increase in accrued liabilities 
C)  the sale of an asset for a gain 
D)  a drop in the amount owed on a bond 
E)  an increase in stock issued

Question 11

Net cash build occurs when the sum of cash flows from operations and investing is negative.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not depreciated?

Accepted Answer

A)  inventory 
B)  machinery 
C)  land 
D)  both a and b 
E)  both a and c 
A)  inventory 
B)  machinery 
C)  land 
D)  both a and b 
E)  both a and c

Question 13

The balance sheet equation is: Total Assets = Total Liabilities + Net Income.

Accepted Answer

A) True 
 B)False

Question 14

"Retained earnings" is:

Accepted Answer

A)  a corporate asset 
B)  part of owners' equity 
C)  neither a or b 
D)  both a and b 
A)  a corporate asset 
B)  part of owners' equity 
C)  neither a or b 
D)  both a and b

Question 15

The practice of recording economic activity when realized is known as accrual accounting.

Accepted Answer

A) True 
 B)False

Question 16

Financial statement that provides a snapshot of a business' financial position as of a specific date is called the:

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of retained earnings 
D)  statement of cash flows 
A)  income statement 
B)  balance sheet 
C)  statement of retained earnings 
D)  statement of cash flows

Question 17

A firm with constant variable costs has a survival revenue breakeven of $375,000. This year it had $250,000 in sales, $100,000 of which was a fixed cost. What are the firm's cash fixed costs?

Accepted Answer

A)  $150,000 
B)  $225,000 
C)  $625,000 
D)  $937,500 
A)  $150,000 
B)  $225,000 
C)  $625,000 
D)  $937,500

Question 18

"Survival revenues" is the amount of revenues just offsetting variable and cash fixed costs.

Accepted Answer

A) True 
 B)False

Question 19

What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?

Accepted Answer

A)  $460,500 
B)  $615,385 
C)  $1,142,857 
D)  $2,000,334 
E)  $4,000,667 
A)  $460,500 
B)  $615,385 
C)  $1,142,857 
D)  $2,000,334 
E)  $4,000,667

Question 20

Last year, Beth's Baked Goods exactly broke even with cash fixed costs of $63,000. If its breakeven survival revenue level was $94,000, what was its variable cost revenue ratio VCRR)?

Accepted Answer

A)  .27 
B)  .30 
C)  .33 
D)  .67 
A)  .27 
B)  .30 
C)  .33 
D)  .67

"Variable expenses" are costs that are expected to remain constant over a range of revenues for a specific time period.

"Gross earnings" is equal to:

"Contribution profit margin" is the portion of the sale of a product that contributes to covering the cash fixed costs.

The balance sheet equation states that total assets =

Cash or other assets that are expected to be converted into cash in less than one year are known as current liabilities.

Financial statement that shows how cash, as reflected in accrual accounting, flows into and out of a company during a specific period of operation is called the:

Assets are financial and physical items controlled or owned by the business.

Net cash burn occurs when the sum of cash flows from operations and investing is positive.

During the development stage in a new venture's life cycle, the income statement typically shows no sales but expenses such as rent, utilities, and a subsistence salary for the entrepreneur.

Which of the following is a use of cash?

Net cash build occurs when the sum of cash flows from operations and investing is negative.

Which of the following is not depreciated?

The balance sheet equation is: Total Assets = Total Liabilities + Net Income.

"Retained earnings" is:

The practice of recording economic activity when realized is known as accrual accounting.

Financial statement that provides a snapshot of a business' financial position as of a specific date is called the:

A firm with constant variable costs has a survival revenue breakeven of $375,000. This year it had $250,000 in sales, $100,000 of which was a fixed cost. What are the firm's cash fixed costs?

"Survival revenues" is the amount of revenues just offsetting variable and cash fixed costs.

What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?

Last year, Beth's Baked Goods exactly broke even with cash fixed costs of $63,000. If its breakeven survival revenue level was $94,000, what was its variable cost revenue ratio VCRR)?

Introduction to Finance for Entrepreneurs

Developing the Business Idea

Organizing and Financing a New Venture

Evaluating Operating and Financial Performance

Managing Cash Flow

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Projecting Financial Statements

Valuing Early-Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Security Structures and Determining Enterprise Values

Harvesting the Business Venture Investment

Financially Troubled Ventures: Turnaround Opportunities

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Exam 4: Preparing and Using Financial Statements

"Variable expenses" are costs that are expected to remain constant over a range of revenues for a specific time period.

"Gross earnings" is equal to:

"Contribution profit margin" is the portion of the sale of a product that contributes to covering the cash fixed costs.

The balance sheet equation states that total assets =

Cash or other assets that are expected to be converted into cash in less than one year are known as current liabilities.

Financial statement that shows how cash, as reflected in accrual accounting, flows into and out of a company during a specific period of operation is called the:

Assets are financial and physical items controlled or owned by the business.

Net cash burn occurs when the sum of cash flows from operations and investing is positive.

During the development stage in a new venture's life cycle, the income statement typically shows no sales but expenses such as rent, utilities, and a subsistence salary for the entrepreneur.

Which of the following is a use of cash?

Net cash build occurs when the sum of cash flows from operations and investing is negative.

Which of the following is not depreciated?

The balance sheet equation is: Total Assets = Total Liabilities + Net Income.

"Retained earnings" is:

The practice of recording economic activity when realized is known as accrual accounting.

Financial statement that provides a snapshot of a business' financial position as of a specific date is called the:

A firm with constant variable costs has a survival revenue breakeven of $375,000. This year it had $250,000 in sales, $100,000 of which was a fixed cost. What are the firm's cash fixed costs?

"Survival revenues" is the amount of revenues just offsetting variable and cash fixed costs.

What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?

Last year, Beth's Baked Goods exactly broke even with cash fixed costs of $63,000. If its breakeven survival revenue level was $94,000, what was its variable cost revenue ratio VCRR)?

Introduction to Finance for Entrepreneurs

Developing the Business Idea

Organizing and Financing a New Venture

Evaluating Operating and Financial Performance

Managing Cash Flow

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Projecting Financial Statements

Valuing Early-Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Security Structures and Determining Enterprise Values

Harvesting the Business Venture Investment

Financially Troubled Ventures: Turnaround Opportunities

Filters