Question 1

How would you express a ratio as a percentage?

Accepted Answer

A)  Multiply it by 100 
B)  Divide it by 100 
C)  Add a percentage sign 
D)  Subtract 100 
E)  This is impossible to do. 
A)  Multiply it by 100 
B)  Divide it by 100 
C)  Add a percentage sign 
D)  Subtract 100 
E)  This is impossible to do.

Question 2

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 3

Entrepreneurs use a(n) ________ to track assets and liabilities.

Accepted Answer

A)  Balance sheet 
B)  Cash flow statement 
C)  Income statement 
D)  Balance report 
E)  Liabilities list 
A)  Balance sheet 
B)  Cash flow statement 
C)  Income statement 
D)  Balance report 
E)  Liabilities list

Question 4

If revenues are greater than expenses, the income statement balance will be positive, showing that the business has incurred loss.

Accepted Answer

A) True 
 B)False

Question 5

In a balance sheet, the difference between assets and liabilities is called ________.

Accepted Answer

A)  Owner's equity 
B)  debt 
C)  Cash flow 
D)  Profit 
E)  Income 
A)  Owner's equity 
B)  debt 
C)  Cash flow 
D)  Profit 
E)  Income

Question 6

Successful entrepreneurs use their financial records to prepare ________ income statements that show sales and costs for the previous period.

Accepted Answer

A)  Quarterly 
B)  Yearly 
C)  Monthly 
D)  Biannually 
E)  None of the above 
A)  Quarterly 
B)  Yearly 
C)  Monthly 
D)  Biannually 
E)  None of the above

Question 7

You can create ________ from your income statement that will help you analyze your business further.

Accepted Answer

A)  Financial ratios 
B)  Asset categories 
C)  Liabilities categories 
D)  All of the above 
E)  None of the above 
A)  Financial ratios 
B)  Asset categories 
C)  Liabilities categories 
D)  All of the above 
E)  None of the above

Question 8

When an entrepreneur makes a scheduled payment on a conventional loan ________.

Accepted Answer

A)  Part of it goes to principal and part goes to interest 
B)  All of it goes to principal (balance sheet) 
C)  All of it goes to interest (income statement) 
D)  Part of it pays penalties 
E)  None of the above 
A)  Part of it goes to principal and part goes to interest 
B)  All of it goes to principal (balance sheet) 
C)  All of it goes to interest (income statement) 
D)  Part of it pays penalties 
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

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 11

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%

Question 12

How does a debt-to-equity ratio help describe the financial health of a company?

Accepted Answer

The debt-to-equity ratio compares total

Question 13

A balance sheet is a financial statement that shows the assets, liabilities, and cash flow of a business.

Accepted Answer

A) True 
 B)False

Question 14

Steve starts his business on January 1, and compiles all of his first month's sales and expenses and does his financial statements on February 1. Is Steve doing a good job with his record keeping?

Accepted Answer

In this instance, Steve is pro

Question 15

What is the purpose of financial ratio analysis?

Accepted Answer

Financial ratios examine relationships a

Question 16

Jared analyzed the income statement for his independent label and found that for every dollar of sales, 30 cents was spent on cost of goods sold. The gross profit per dollar was 70 cents. If 20 cents was spent on operating costs and 10 cents on taxes, what is the net profit per dollar?

Accepted Answer

A)  40 cents 
B)  60 cents 
C)  30 cents 
D)  70 cents 
E)  50 cents 
A)  40 cents 
B)  60 cents 
C)  30 cents 
D)  70 cents 
E)  50 cents

Question 17

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 18

Businesses in different countries prepare and present income statements in the same way anywhere in the world.

Accepted Answer

A) True 
 B)False

Question 19

COGS is an acronym for "Cost of Goods Shipped."

Accepted Answer

A) True 
 B)False

Question 20

Ideally, you want to have a positive "double" bottom line. This means ________.

Accepted Answer

A)  You are achieving a profit and meeting your mission 
B)  You have twice the number of customers that you expected 
C)  You have twice the profit that you expected 
D)  All of the above 
E)  None of the above 
A)  You are achieving a profit and meeting your mission 
B)  You have twice the number of customers that you expected 
C)  You have twice the profit that you expected 
D)  All of the above 
E)  None of the above

Exam 13: Using Financial Statements to Guide a Business

How would you express a ratio as a percentage?

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.

Entrepreneurs use a(n) ________ to track assets and liabilities.

If revenues are greater than expenses, the income statement balance will be positive, showing that the business has incurred loss.

In a balance sheet, the difference between assets and liabilities is called ________.

Successful entrepreneurs use their financial records to prepare ________ income statements that show sales and costs for the previous period.

You can create ________ from your income statement that will help you analyze your business further.

When an entrepreneur makes a scheduled payment on a conventional loan ________.

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

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

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

How does a debt-to-equity ratio help describe the financial health of a company?

A balance sheet is a financial statement that shows the assets, liabilities, and cash flow of a business.

Steve starts his business on January 1, and compiles all of his first month's sales and expenses and does his financial statements on February 1. Is Steve doing a good job with his record keeping?

What is the purpose of financial ratio analysis?

Jared analyzed the income statement for his independent label and found that for every dollar of sales, 30 cents was spent on cost of goods sold. The gross profit per dollar was 70 cents. If 20 cents was spent on operating costs and 10 cents on taxes, what is the net profit per dollar?

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

Businesses in different countries prepare and present income statements in the same way anywhere in the world.

COGS is an acronym for "Cost of Goods Shipped."

Ideally, you want to have a positive "double" bottom line. This means ________.

Entrepreneurs Recognize Opportunities

Franchising

Finding Opportunity in an Existing Business

The Business Plan: Road Map to Success

Creating Business From Opportunity

Exploring Your Market

Developing the Right Marketing Mix and Plan

Pricing and Credit Strategies

Integrated Marketing Communications

Marketing Globally

Smart Selling and Effective Customer Service

Understanding and Managing Start-Up, Fixed, and Variable Costs

Cash Flow and Taxes

Financing Strategy: Debt, Equity, or Both

Addressing Legal Issues and Managing Risk

Operating for Success

Location, Facilities, and Layout

Human Resources and Management

Leadership and Ethical Practices

Franchising, Licensing, and Harvesting: Cashing in Your Brand

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