Deck 10: Accounting and Financial Statements: Presentation and Uses

Question 1

What do financial ratios analyze?

A)the "bottom line"
B)the return to the franchised business owner
C)the "net" profit
D)all of the above

Answer 1

D
The "net" profit is also called the "final profit" or the "bottom line." It is the sum of all revenues minus the sum of all expenses and represents the return to the franchised business owner.Generally,financial ratios are seen as analyzing this figure

Question 2

Which of the following is like a "snapshot" of the franchise's fiscal condition?

A)the cash flow statement
B)the balance sheet
C)the income statement
D)the bottom line

Answer 2

B
The balance sheet is simply a "snapshot" of the fiscal condition of the franchise at a given instant in time

Question 3

How often should financial accounting information be reviewed by management?

A)monthly
B)every fiscal quarter
C)every six months
D)annually

Answer 3

B
Financial accounting provides owners and managers with the information often necessary for making appropriate business decisions.This information should be reviewed by management each fiscal quarter.

Question 4

Franchisors capitalizing or financing their businesses are generally required to disclose three key financial statements.Which of the following is not one of those statements?

A)income statement or operating statement
B)balance sheet or statement of financial position
C)net profit statement or bottom line
D)cash flow or cash budget statement

Question 5

Which of the following types of financial ratios measures the ability of the franchise organization to turn sales into profits?

A)activity
B)market
C)profitability
D)coverage/leverage

Question 6

Which of the following things is NOT true about the accounting process?

A)it sometimes develops an imprecise picture of the franchise.
B)it can measure the exact worth of a franchise.
C)it consists of the measurement and record of money,assets,and resources and their flow through the franchise.
D)its records are not exact.

Question 7

Which of the following types of financial ratios measures how well a franchise meets its short-term debts or financial obligations?

A)liquidity
B)profitability
C)activity
D)coverage/leverage

Question 8

What is the purpose of ratio analyses of financial statements?

A)to gauge the franchise's profit potential
B)to asses the franchisor or franchisee's management skills
C)to determine the success of the franchise in meeting its overall objectives
D)to measure the exact worth of a franchise

Question 9

Which of the following processes involves interpreting a relationship between two financial figures?

A)accounting
B)ratio analysis
C)ledgering
D)cash flow

Question 10

A franchise's economic figures must be recorded,then transferred and balanced before final calculations can be determined.Which of the following sequences indicates the path taken by these figures during the accounting process?

A)journal,general ledger,financial statements
B)general ledger,journal,financial statements
C)financial statements,journal,general ledger
D)journal,financial statements,general ledger