Unit 7 Study Guide and Quiz Answers

Which type of funding requires that the business owner share ownership with investors?A.Debt fundingB.Reserve fundingC.Equity fundingD.Angel funding

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

Which of the following assets is the most liquid?A.InventoryB.Real estateC.Money in the bankD.A piece of equipment

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

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

In double-entry accounting, where should you record money that is leaving your company to pay bills?A.In the debits columnB.In the credits columnC.In the asset columnD.In the cash flow column

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

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

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.