Principles of business chap. 12

Flashcard maker : Lily Taylor
false
all income that a business receives over a period of time is called profit
true
to prepare a budget, a business must be able to identify and predict the amount of each source of income and each type of expense
false
an operating business will determine if a business has adequate financial resources on hand to pay bills as they become due or if it will need to borrow money
false
an accounts receivable record identifies the companies from which credit purchases were made and the amount purchased, paid, and owed
true
sales and profits for a specific period are reported in a company’s income statement
true
assets – liabilities = owner’s equity
false
a majority of employees in most businesses receive a weekly or monthly salary
true
payroll taxes consist of income taxes, social security, medicare, and unemployment taxes
false
the company’s liabilities divided by the owners’ equity is the current ratio
true
at the end of the period covered by a budget, the business will prepare new financial statements
revenue is greater than expanses
a business will make profit if
new factories and equipment may be needed
when a business expands,
the business’s financial records
for long-established businesses, the main source of budget information is
the national federation of independent business
all of thee following are private businesses that collect and publish financial information on similar businesses and industries except
to convince employees to take a big pay cut so the business can avoid bankruptcy
which of the following is not generally a goal of a business budget
prepare a list of each type of income and expanse that will be part of the budget
the first step of the budgeting process is to
a cash budget
which type of budget is an estimate of the actual money received and paid out for a specific period
operating budgets are commonly prepared for all of the above time frames
an operating budget is usually planned for
depreciation records
which type of financial records identify the amount assets have decreased in value due to their age and use
assets
in simple terms, __ are what a company owns
inventory
which of the following is not a long-term asset
net income
total revenue – total expanses =
six months or a year
an income statement usually covers
interest earned on investments
all of the following would be considered expanses EXCEPT
yearly
which of the following is not a common way businesses pay employees
a salary
which of the following would not be considered a benefit
FICA taxes
employers must make matching contributions to
earnings report or pay stub
most businesses include an __ with the employee’s paycheck; this document usually includes information for the current pay period as well as the cumulative amounts for the year
net income ratio
this shows how much profit is being made by each dollar of sales for the period being analyzed
make needed adjustments to the budget
the final step in the financial decision-making process is to
expanses
the costs of operating a business are called
budget
a detailed plan for a business’s financial needs is called
start-up
an __ budget plans income and expanses from the beginning of a new business or a major business expansion until it becomes profitable
operating
an __ budget describes the financial plan for ongoing functions of the business for a specific period
asset
records are financial records that name the building and equipment owned by the business, their original and current value, and the amount owned if money was borrowed to purchase them
accounts
records of __ identify all purchases and sales made using credit
inventory
records identify the type and nu,her of products on hand for sale
balance
a company reports its assets, liabilities, and owner’s equity on the __ sheet
current
assets include cash and those items that can be readily converted into cash
payroll
an __ is the financial record of employee compensation, deductions, and net pay
self
proprietors must pay ___ – employment taxes, which are contributions to medicare and social security
direct
with ___ deposit, an employer transfers net pay electronically into an employee’s bank
ratios
financial performance ___ are comparisons of a company’s financial elements that indicate how well the business is performing
discrepency
an ___ difference between actual and budgeting performance
self
budget

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