Question 1

Kurt has been given an Excel worksheet with his cash flow statement on it.He, by error, sorted the lines of the statement alphabetically.We need to help Kurt separate his cash flows into two categories: inflows and outflows.Which of the following should be a cash outflow?

Accepted Answer

Interest on bank loans and overdrafts is a cash outflow because it represents money paid out by the business to service its debt.

Question 2

The balance sheet shows ______.

Accepted Answer

The balance sheet shows what the business owns (assets) and what the business owes (liabilities) at a specific point in time, which gives a snapshot of the financial position of the business. It does not show only net worth, current expenses, or shareholder deferred revenue.

Question 3

When a company has long-term investments, it means they ______.

Accepted Answer

Long-term investments refer to assets that a company holds for more than one year, which can include cash, stocks, bonds, and real estate. These investments are intended to provide long-term value to the company, such as generating income, increasing the value of the company, or providing operational or strategic benefits. B, C, and D are incorrect because they do not accurately describe the purpose or nature of long-term investments.

Question 4

The three essential financial statements include all of the following EXCEPT ______.

Accepted Answer

The three essential financial statements are the balance sheet, income statement, and cash flow statement. The "entrepreneurs scorecard" is not a commonly recognized financial statement.

Question 5

______ is the amount that customers owe to a company after receipt of item(s) purchased.

Accepted Answer

Accounts receivable is the amount that customers owe to a company after receipt of item(s) purchased. It represents the amount of money that a company is entitled to receive for goods or services that it has sold but has not yet received payment for. Accounts payable, on the other hand, is the amount that a company owes to its suppliers or vendors for goods or services that it has purchased but has not yet paid for. Accounts deferred and accounts accrued are not relevant in this context.

Question 6

Brynlee paid $500,000 for a company, $100,000 in excess of the book value.Brynlee has ______.

Accepted Answer

Goodwill is an intangible asset that represents the value of a company's brand, reputation, customer relationships, and other factors that contribute to its overall value. When Brynlee paid $100,000 in excess of the book value of the company, it means that she paid for intangible assets such as goodwill. Therefore, the correct choice is C.

Question 7

The financial statement that subtracts cost of goods sold from revenue to arrive at gross profit is is a(n) ______.

Accepted Answer

The income statement is the financial statement that subtracts cost of goods sold from revenue to arrive at gross profit. The balance sheet shows the company's assets, liabilities, and equity. The cash flow statement tracks the flow of cash in and out of the company. The entrepreneur's scorecard is a tool used to measure the company's success and progress towards goals.

Question 8

Beckett has purchased a business and now has intangible assets.He has ______.

Accepted Answer

Intangible assets include patents, software programs, copyrights, trademarks, and/or brand names. These are assets that cannot be physically touched or seen but have value to the business. A and D are incorrect because not all intangible assets cannot be touched, and intangible assets are separate from property, plant, and equipment. B is incorrect because a "plug amount" refers to a difference in the balance sheet that needs to be adjusted, not an intangible asset.

Question 9

Arya wants to produce a financial report that shows the amounts the company owes, what it owns, and include her shareholder stake at a particular date in time.She wants to produce a ______.

Accepted Answer

The balance sheet shows a snapshot of the company's financial position at a particular date in time, including its liabilities (what it owes), assets (what it owns), and shareholder equity (including Arya's stake in the company). The other options do not provide a comprehensive view of the company's financial position at a point in time.

Question 10

Kurt has been given an Excel worksheet with his cash flow statement on it.He, by error, sorted the lines of the statement alphabetically.We need to help Kurt separate his cash flows into two categories: inflows and outflows.Which of the following should be a cash inflow?

Accepted Answer

Cash sales refer to money received from customers for products or services, making it a cash inflow. The other options involve giving money away (such as repayment of dividends or loans) or paying interest on loans, making them cash outflows.

Question 11

Jaylah has a 5-year bank loan with her business.The principle that is scheduled to be paid in the last 4 years is considered ______.

Accepted Answer

The principle that Jaylah is scheduled to pay in the last 4 years of her 5-year bank loan is a long-term liability, as it will not be due for payment until after one year from the current date. Option A is incorrect because the principle is not a loss, but rather a portion of the loan that needs to be repaid. Option C is incorrect because short-term portion of long-term debt refers to the portion of a long-term loan that is due in the current year, whereas in this scenario, the portion due is in future years. Option D is incorrect because operational cash flows refer to the cash flows generated from the operations of a business, which is not relevant to the principle that is scheduled to be paid in the last 4 years of Jaylah's bank loan.

Question 12

Shareholders equity is the same as ______.

Accepted Answer

Shareholders' equity is the same as owners' capital.

Question 13

Operating expenses include which of the following?

Accepted Answer

Operating expenses typically include expenses related to running and managing a business, such as sales expense and administrative and general expenses. Cost of goods sold is a separate expense category related to the production and sale of goods, while liabilities, deferred expenses, and assets are typically reflected on a balance sheet. Amortization and interest expense are typically categorized as non-operating expenses.

Question 14

The cash flow equation coming to Increase/Decrease in Cash from Operations is ______.

Accepted Answer

The answer of The cash flow equation coming to Increase/Decrease...

Question 15

Vivienne wants to produce a report that measures her financial performance on a monthly basis.She wants to see selling- and expense-related activities that result in profit or loss over a period of time.She is interested in producing which of the following statements?

Accepted Answer

The income statement (also known as profit and loss statement) presents a summary of a company's revenues and expenses during a specified time period, showing whether the company made a profit or incurred a loss. Vivienne's interest in measuring selling- and expense-related activities that result in profit or loss over a period of time aligns with the purpose of an income statement. Thus, the best choice is D - income statement.

Question 16

The backlog report is ______.

Accepted Answer

The backlog report is a record of orders that have been received but not yet fulfilled or delivered to the customer. This can include orders that are in production, on hold, or waiting for inventory to be restocked. It is an important metric for companies to track as it can impact customer satisfaction and sales revenue.

Question 17

Kurt has a 5-year bank loan with his business.The principle that is scheduled to be paid in the first 12 months is considered ______.

Accepted Answer

The principle that is scheduled to be paid in the first 12 months is considered a short-term portion of long-term debt. This is because the loan is a long-term liability, but the portion that is due within the next 12 months is considered a current liability and is classified as a short-term portion of long-term debt on the balance sheet.

Question 18

Earnings before interest, taxes, depreciation, and amortization is the same as ______.

Accepted Answer

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a financial metric that represents a company's operating earnings before the deduction of interest, taxes, depreciation, and amortization. It is often used by investors and analysts to evaluate a company's financial health and operating performance. Earnings before taxes (EBT) and earnings before interest and taxes (EBIT) also measure a company's operating performance but do not include depreciation and amortization expenses. Net income, on the other hand, is the total amount of profit a company earns after deducting all expenses, including interest, taxes, depreciation, and amortization.

Question 19

Karter is very busy and wants to produce a financial report that details the inflows and outflows of cash for his company over the last month.He is interested in producing a ______.

Accepted Answer

A cash flow statement provides a summary of the cash inflows and outflows of a company. This will allow Karter to understand how much money is coming in and going out, as well as the timing of the cash flows. A balance sheet provides a snapshot of the company's financial position at a point in time, an income statement shows the company's revenues and expenses over a period of time, and an entrepreneur's scorecard is a tool used to measure various aspects of a company's performance, but none of these options would provide the information Karter needs to produce a financial report that details the inflows and outflows of cash.

Question 20

______ are assets converted into cash within a year.

Accepted Answer

Current assets are assets that are expected to be converted into cash or used up within one year. This includes cash, accounts receivable, inventory, and prepaid expenses.

Quiz 17: Financial Statements and Projections for Startups