Question 1

A loan for a delivery van would be repaid over

Accepted Answer

A)  one to six months. 
B)  six months to one year. 
C)  three to five years. 
D)  ten to fifteen years.

Question 2

Equity financing includes funds from venture capital firms and stock sales.

Accepted Answer

A) True 
 B)False

Question 3

A profitable business may not be able to pay all of its bills.

Accepted Answer

A) True 
 B)False

Question 4

Expenses that are not affected by the sales volume of the business are called

Accepted Answer

A)  cash expenses. 
B)  fixed expenses. 
C)  variable expenses. 
D)  non-cash expenses.

Question 5

Long-term liabilities are

Accepted Answer

A)  debts or portions of debt due more than 12 months from the date of the balance sheet. 
B)  bills for inventory. 
C)  amounts due for renovations. 
D)  amounts due for supplies.

Question 6

Goodwill and patents are considered company liabilities.

Accepted Answer

A) True 
 B)False

Question 7

The accrual basis of accounting records sales when they are made and records expenses when they are incurred.

Accepted Answer

A) True 
 B)False

Question 8

Which accounting method records sales when they are made and records expenses when they are incurred?

Accepted Answer

A)  cash basis 
B)  accrual basis 
C)  completed-contract method 
D)  calculation basis

Question 9

Debt financing includes

Accepted Answer

A)  bank loans. 
B)  loans from the Small Business Administration. 
C)  loans from finance companies. 
D)  all of the above.

Question 10

Projected financial statements that are included in the business plan include the opening-day balance sheet, the projected income statements, and the projected cash flow statements.

Accepted Answer

A) True 
 B)False

Question 11

Current liabilities include accounts payable and accrued expenses.

Accepted Answer

A) True 
 B)False

Question 12

The current portion of long-term debt is the

Accepted Answer

A)  interest due on a loan in the next 12 months. 
B)  total amount of interest that will be paid on a loan. 
C)  principal due on a loan in the next 12 months. 
D)  total amount of principal and interest that will be paid on a loan by the time it is paid off.

Question 13

The Small Corporate Offering Registration Act made it 	more difficult for small businesses to sell stock publicly.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not the same as the others?

Accepted Answer

A)  Sales 
B)  Gross margin 
C)  Income 
D)  Revenue

Question 15

Which of the following is not the same as the others?

Accepted Answer

A)  Equity 
B)  Net worth 
C)  Accrued expenses 
D)  Capital account

Question 16

Inventory consists of items purchased by the entrepreneur for resale to the customers.

Accepted Answer

A) True 
 B)False

Question 17

Stock sales may be either

Accepted Answer

A)  public or private. 
B)  equity or debt. 
C)  commercial or industrial 
D)  trademark or trade secret.

Question 18

The completed-contract accounting method is most likely to be used by

Accepted Answer

A)  a retail company. 
B)  a wholesale company. 
C)  a construction company. 
D)  All of the above.

Question 19

It is usually possible for an entrepreneur to obtain bank financing for a start-up without investing any personal funds.

Accepted Answer

A) True 
 B)False

Question 20

The accrual method of accounting gives a more accurate 	picture of the financial health of the company than does the cash basis.

Accepted Answer

A) True 
 B)False

Exam 3: Start-Up Costs and Financing

A loan for a delivery van would be repaid over

Equity financing includes funds from venture capital firms and stock sales.

A profitable business may not be able to pay all of its bills.

Expenses that are not affected by the sales volume of the business are called

Long-term liabilities are

Goodwill and patents are considered company liabilities.

The accrual basis of accounting records sales when they are made and records expenses when they are incurred.

Which accounting method records sales when they are made and records expenses when they are incurred?

Debt financing includes

Projected financial statements that are included in the business plan include the opening-day balance sheet, the projected income statements, and the projected cash flow statements.

Current liabilities include accounts payable and accrued expenses.

The current portion of long-term debt is the

The Small Corporate Offering Registration Act made it more difficult for small businesses to sell stock publicly.

Which of the following is not the same as the others?

Which of the following is not the same as the others?

Inventory consists of items purchased by the entrepreneur for resale to the customers.

Stock sales may be either

The completed-contract accounting method is most likely to be used by

It is usually possible for an entrepreneur to obtain bank financing for a start-up without investing any personal funds.

The accrual method of accounting gives a more accurate picture of the financial health of the company than does the cash basis.