Entrepreneurship and Small Business Management

Chapter 21: Financial Management

Practice Test

1
A financial statement with financial data from two accounting periods is called a____________.
A)comparative balance sheet
B)double-entry statement
C)comparative financial statement
D)statement of operations and earnings
2
____________involves the comparison of two or more amounts on a financial statement.
A)Ratio analysis
B)Comparative income analysis
C)Asset analysis
D)Financial statement analysis
3
The__________shows the relationship between each expense and total sales as reported on the income statement.
A)ratio analysis
B)current ratio
C)quick ratio
D)operating ratio
4
A___________is a measure of the relationship between short-term liquid assets and current liabilities.
A)operating ratio
B)quick ratio
C)ratio analysis
D)current ratio
5
The main goal of a company is to_____________.
A)make money
B)contribute to the community
C)control costs
D)compete
6
Before owners decide to invest in a change in their profit plans, they need to evaluate its______________.
A)expense
B)marketing objectives
C)profit potential
D)growth
7
_________expenses are business expenses that change with each unit of product produced.
A)Fixed
B)Current
C)Labor
D)Variable
8
One way to control costs in your business is to___________.
A)lease
B)expand space
C)lower prices
D)add employees
9
A/An_____________is a formal, written statement of expected revenue and expenses for a future period of time.
A)statement
B)budget
C)journal
D)ledger
10
To help monitor your business's cash flow, you can create a____________.
A)software program
B)statement of cash flows
C)cash budget
D)balance sheet
11
One way to improve your cash flow would be to offer cash__________.
A)discounts
B)rebates
C)incentives
D)payments
12
______________are long-term commitments of large sums of money to buy new equipment or replace old equipment.
A)Lines of credit
B)Venture capital
C)Contingency funds
D)Capital expenditures
13
You can build closer relationships with customers by making__________easier.
A)marketing
B)accounting
C)purchasing
D)tax deductions
14
Most businesses build their credit policies around the__________of credit.
A)5Cs
B)3Cs
C)lines
D)lack
15
If you cannot collect an account yourself, you have to get help_________.
A)forcefully
B)externally
C)internally
D)from the government
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