Study Guide and Quiz Answers

If you wanted to make sure a company has enough money available to pay its bills, which financial statement would be most helpful?A.Balance sheetB.Income statementC.Statement of owners' equityD.Cash flow statement

If you want to know whether a company had a profit or a loss during a specific period of time, which financial statement would be most helpful?A.Statement of owners' equityB.Cash flow statementC.Balance sheetD.Income statement

What is the opportunity cost of an investment?A.The combined values of the other opportunities availableB.The value of the next most valuable opportunityC.The marginal benefit of the investmentD.The volatility of the investment

Money that your company has in the bank in case of unexpected financial needs or in case sales slow down is called ____________.A.An asset fundB.A cash reserveC.EquityD.Insurance

Which of the following statements describes GAAP?A.GAAP standards are written and regulated by the government.B.It is legally required that all companies meet GAAP standards.C.Companies that meet GAAP standards usually use cash basis accounting.D.GAAP recommends accrual basis accounting.

The costs of running a business are called ___________.A.Startup costsB.Cash flowC.Operating expensesD.Fixed costs

In the accounting equation, assets are equal to which two things?A.Debits + equityB.Debits + accountsC.Liabilities + equityD.Liabilities + accounts

Which of the following is a type of liability?A.A revenue streamB.A liquid assetC.Accounts payableD.Accounts receivable

Which type of risk is most likely to be insurable?A.Pure riskB.Speculative riskC.Equity riskD.Investment risk

Which of the following tips can hurt your cash flow?A.Increase your sales.B.Pay your bills early.C.Keep a cash reserve.D.Offer credit only to low risk borrowers.