Question 1

Define debt and equity and explain the difference between them.Where does each appear on financial statements?

Accepted Answer

Equity is the amount of capital invested

Question 2

Cash itself or items that could quickly be turned into cash or will be used within 1 year are called ________.

Accepted Answer

A) Current assets 
B) Long-term assets 
C) Liquid assets 
D) Current liabilities 
E) Stuff 
A) Current assets 
B) Long-term assets 
C) Liquid assets 
D) Current liabilities 
E) Stuff

Question 3

Examining ________ monthly can help determine what is doing well,or poorly,in a business.

Accepted Answer

A) Operating ratios 
B) Income statement ratios 
C) Financial ratios 
D) All of the above 
E) None of the above 
A) Operating ratios 
B) Income statement ratios 
C) Financial ratios 
D) All of the above 
E) None of the above

Question 4

Return on sales is the percentage created when sales are divided into gross margin.

Accepted Answer

A) True 
 B)False

Question 5

Current assets are cash itself or items that could quickly be turned into cash (liquidated),or will be used by the business within one year.

Accepted Answer

A) True 
 B)False

Question 6

Long-term liabilities are debts that are scheduled for payment within one year.These include the portion of long-term debt due within the year.

Accepted Answer

A) True 
 B)False

Question 7

The expression,"What you made over what you paid,times one hundred," is a device to remember how to compute ________.

Accepted Answer

A) ROI 
B) ROA 
C) ROS 
D) All of the above 
E) None of the above 
A) ROI 
B) ROA 
C) ROS 
D) All of the above 
E) None of the above

Question 8

EBIT is an acronym for ________.

Accepted Answer

A) Earnings before interest and taxes 
B) Earnings before income taxes 
C) Earnings before information technology costs 
D) All of the above 
E) None of the above 
A) Earnings before interest and taxes 
B) Earnings before income taxes 
C) Earnings before information technology costs 
D) All of the above 
E) None of the above

Question 9

Investment is something you put time,energy,or money into because you expect to gain profit or satisfaction in return.

Accepted Answer

A) True 
 B)False

Question 10

What is the purpose of financial ratio analysis?

Accepted Answer

Financial ratios examine relationships a

Question 11

A fiscal year may differ from the calendar year.

Accepted Answer

A) True 
 B)False

Question 12

What must balance with assets on the balance sheet?

Accepted Answer

A) Liabilities and owner's equity 
B) Net worth and owner's equity 
C) Capital and owner's equity 
D) Net profit 
E) Available cash 
A) Liabilities and owner's equity 
B) Net worth and owner's equity 
C) Capital and owner's equity 
D) Net profit 
E) Available cash

Question 13

Return on Sales (ROS)is also called a(n)________.

Accepted Answer

A) Profit margin 
B) Operating margin 
C) Contribution margin 
D) Gross margin 
E) Profit scope 
A) Profit margin 
B) Operating margin 
C) Contribution margin 
D) Gross margin 
E) Profit scope

Question 14

If cash has decreased from $10,000 to $8000 on the balance sheet,it means the company is doing poorly.

Accepted Answer

A) True 
 B)False

Question 15

In a business formula such as Return on Investment,"on" means ________.

Accepted Answer

A) "Divided by" 
B) "Deducted from" 
C) "On top of" 
D) "Instead of" 
E) None of the above 
A) "Divided by" 
B) "Deducted from" 
C) "On top of" 
D) "Instead of" 
E) None of the above

Question 16

Depreciation reflects the wear and tear on an asset over time or other loss of value through obsolescence.

Accepted Answer

A) True 
 B)False

Question 17

To create a same size analysis,calculate each line item as a percentage of ________.

Accepted Answer

A) Sales 
B) Income 
C) Costs 
D) Units 
E) None of the above 
A) Sales 
B) Income 
C) Costs 
D) Units 
E) None of the above

Question 18

ROI is always calculated for ________.

Accepted Answer

A) A specific time period,such as a month or a year 
B) The length of a business's fiscal year 
C) A month 
D) Ever 
E) None of the above 
A) A specific time period,such as a month or a year 
B) The length of a business's fiscal year 
C) A month 
D) Ever 
E) None of the above

Question 19

A business's operating ratios are computed by ________.

Accepted Answer

A) Expense/sales 
B) Cost of goods sold/sales 
C) Income/sales 
D) Expense/cost of goods sold 
E) None of the above 
A) Expense/sales 
B) Cost of goods sold/sales 
C) Income/sales 
D) Expense/cost of goods sold 
E) None of the above

Question 20

If you invest $1,525,000 in a business and earn a return of $775,000,what is your ROI?

Accepted Answer

A) 51% 
B) 42% 
C) 45% 
D) 37% 
E) 57% 
A) 51% 
B) 42% 
C) 45% 
D) 37% 
E) 57%

Exam 13: Using Financial Statements to Guide a Business

Define debt and equity and explain the difference between them.Where does each appear on financial statements?

Cash itself or items that could quickly be turned into cash or will be used within 1 year are called ________.

Examining ________ monthly can help determine what is doing well,or poorly,in a business.

Return on sales is the percentage created when sales are divided into gross margin.

Current assets are cash itself or items that could quickly be turned into cash (liquidated),or will be used by the business within one year.

Long-term liabilities are debts that are scheduled for payment within one year.These include the portion of long-term debt due within the year.

The expression,"What you made over what you paid,times one hundred," is a device to remember how to compute ________.

EBIT is an acronym for ________.

Investment is something you put time,energy,or money into because you expect to gain profit or satisfaction in return.

What is the purpose of financial ratio analysis?

A fiscal year may differ from the calendar year.

What must balance with assets on the balance sheet?

Return on Sales (ROS)is also called a(n)________.

If cash has decreased from $10,000 to $8000 on the balance sheet,it means the company is doing poorly.

In a business formula such as Return on Investment,"on" means ________.

Depreciation reflects the wear and tear on an asset over time or other loss of value through obsolescence.

To create a same size analysis,calculate each line item as a percentage of ________.

ROI is always calculated for ________.

A business's operating ratios are computed by ________.

If you invest $1,525,000 in a business and earn a return of $775,000,what is your ROI?

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