Question 1

Money that is borrowed to start a business is known as

Accepted Answer

A)  equity investment. 
B)  debt financing. 
C)  venture capital. 
D)  stock sales. 
A)  equity investment. 
B)  debt financing. 
C)  venture capital. 
D)  stock sales.

Question 2

In general, working capital should cover at least

Accepted Answer

A)  all of the start-up costs. 
B)  three to six months of expenses. 
C)  renovations and insurance. 
D)  deposits and inventory. 
A)  all of the start-up costs. 
B)  three to six months of expenses. 
C)  renovations and insurance. 
D)  deposits and inventory.

Question 3

A corporation owner's salary is a tax-deductible expense.

Accepted Answer

A) True 
 B)False

Question 4

If a lease agreement states that rent is 7% of sales, rent is a

Accepted Answer

A)  marginal expense. 
B)  fixed expense. 
C)  variable expense. 
D)  non-cash expense. 
A)  marginal expense. 
B)  fixed expense. 
C)  variable expense. 
D)  non-cash expense.

Question 5

The income statement records

Accepted Answer

A)  sales. 
B)  cost of goods sold. 
C)  expenses. 
D)  all of the above. 
A)  sales. 
B)  cost of goods sold. 
C)  expenses. 
D)  all of the above.

Question 6

Finance companies often provide loans to companies that cannot get financing through banks.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a type of equity financing?

Accepted Answer

A)  Partners 
B)  Venture capital 
C)  Finance companies 
D)  Stock sales 
A)  Partners 
B)  Venture capital 
C)  Finance companies 
D)  Stock sales

Question 8

Which accounting method records a sale when the payment is received from the customer and records the expense when the bill is paid?

Accepted Answer

A)  Cash basis 
B)  Accrual basis 
C)  Completed-contract method 
D)  Calculation basis 
A)  Cash basis 
B)  Accrual basis 
C)  Completed-contract method 
D)  Calculation basis

Question 9

The income statement compares the possessions of a company and the debts that it owes on a specific day.

Accepted Answer

A) True 
 B)False

Question 10

When small businesses borrow money from banks, the interest rate they are charged is usually

Accepted Answer

A)  not affected by prime rate. 
B)  two points below prime rate. 
C)  one to three points above prime rate. 
D)  five to seven points above prime rate. 
A)  not affected by prime rate. 
B)  two points below prime rate. 
C)  one to three points above prime rate. 
D)  five to seven points above prime rate.

Question 11

Which of the following does not affect the cash balance of a business?

Accepted Answer

A)  Increases in inventory 
B)  Changes in accounts receivables 
C)  Depreciation 
D)  Seasonality 
A)  Increases in inventory 
B)  Changes in accounts receivables 
C)  Depreciation 
D)  Seasonality

Question 12

The account that is an accumulation of all of the profits and losses of the company from the day it began is the

Accepted Answer

A)  retained earnings. 
B)  gross margin. 
C)  liabilities. 
D)  asset margin. 
A)  retained earnings. 
B)  gross margin. 
C)  liabilities. 
D)  asset margin.

Question 13

The _____________ compares the possessions of a company and the debts that it owes on a specific day.

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  cash flow projection 
D)  completed-contract method 
A)  income statement 
B)  balance sheet 
C)  cash flow projection 
D)  completed-contract method

Question 14

Money that is borrowed and must be repaid is known as equity financing.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is FALSE?

Accepted Answer

A)  A proprietor's salary is not a tax deductible expense for the company. 
B)  A corporation owner's salary is a tax deductible expense. 
C)  Net profit is equal to gross margin minus operating expenses. 
D)  A profitable business will always have enough cash to pay its bills. 
A)  A proprietor's salary is not a tax deductible expense for the company. 
B)  A corporation owner's salary is a tax deductible expense. 
C)  Net profit is equal to gross margin minus operating expenses. 
D)  A profitable business will always have enough cash to pay its bills.

Question 16

Leasehold improvements are changes in the terms of the entrepreneur's lease agreement.

Accepted Answer

A) True 
 B)False

Question 17

The section of the balance sheet that includes all company debts is the

Accepted Answer

A)  assets. 
B)  liabilities. 
C)  equity. 
D)  cash flow. 
A)  assets. 
B)  liabilities. 
C)  equity. 
D)  cash flow.

Question 18

The current portion of the long-term debt is the interest due on the loan in the next year.

Accepted Answer

A) True 
 B)False

Question 19

Equity financing includes

Accepted Answer

A)  private investors. 
B)  partners. 
C)  venture capital firms. 
D)  all of the above. 
A)  private investors. 
B)  partners. 
C)  venture capital firms. 
D)  all of the above.

Question 20

The Small Business Administration is a federal agency, which has many loan programs available to small businesses.

Accepted Answer

A) True 
 B)False

Money that is borrowed to start a business is known as

In general, working capital should cover at least

A corporation owner's salary is a tax-deductible expense.

If a lease agreement states that rent is 7% of sales, rent is a

The income statement records

Finance companies often provide loans to companies that cannot get financing through banks.

Which of the following is not a type of equity financing?

Which accounting method records a sale when the payment is received from the customer and records the expense when the bill is paid?

The income statement compares the possessions of a company and the debts that it owes on a specific day.

When small businesses borrow money from banks, the interest rate they are charged is usually

Which of the following does not affect the cash balance of a business?

The account that is an accumulation of all of the profits and losses of the company from the day it began is the

The _____________ compares the possessions of a company and the debts that it owes on a specific day.

Money that is borrowed and must be repaid is known as equity financing.

Which of the following is FALSE?

Leasehold improvements are changes in the terms of the entrepreneur's lease agreement.

The section of the balance sheet that includes all company debts is the

The current portion of the long-term debt is the interest due on the loan in the next year.

Equity financing includes

The Small Business Administration is a federal agency, which has many loan programs available to small businesses.

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Exam 3: Start-Up Costs and Financing

Money that is borrowed to start a business is known as

In general, working capital should cover at least

A corporation owner's salary is a tax-deductible expense.

If a lease agreement states that rent is 7% of sales, rent is a

The income statement records

Finance companies often provide loans to companies that cannot get financing through banks.

Which of the following is not a type of equity financing?

Which accounting method records a sale when the payment is received from the customer and records the expense when the bill is paid?

The income statement compares the possessions of a company and the debts that it owes on a specific day.

When small businesses borrow money from banks, the interest rate they are charged is usually

Which of the following does not affect the cash balance of a business?

The account that is an accumulation of all of the profits and losses of the company from the day it began is the

The _____________ compares the possessions of a company and the debts that it owes on a specific day.

Money that is borrowed and must be repaid is known as equity financing.

Which of the following is FALSE?

Leasehold improvements are changes in the terms of the entrepreneur's lease agreement.

The section of the balance sheet that includes all company debts is the

The current portion of the long-term debt is the interest due on the loan in the next year.

Equity financing includes

The Small Business Administration is a federal agency, which has many loan programs available to small businesses.

Introduction

Management and Personnel

The Legal Section

Insurance

Suppliers

Entrepreneurship Today

The Entrepreneur

Starting a New Business

Buying an Existing Business

Franchising

Women-Owned and Minority-Owned Businesses

Home-Based Businesses

Family Businesses

New Product Development

Business Growth and the Entrepreneur

Global Business

Filters