Entrepreneurship of Financial Statements and Projections for Startups MCQ
______ is a measure of the number of days it takes you to pay your bills.
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Correct Answer:
DPO
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______ expenses are the expenditures that the company makes to generate income.
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Operating
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When conducting a ______, a minimum of three scenarios is recommended: best case, worst case, and likely case.
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sensitivity analysis
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______ is a measure of the number of days it takes to collect on accounts receivable.
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DSO
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Using comparable data that you gathered during your research to compare with financial statements of existing businesses allows you to conduct the ______.
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reasonableness test
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In many types of businesses, the people who work for the business (i.e., labor) can account for ______ of operating costs.
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75–85%
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In determining which market(s) to enter, Manny’s Cookies examined publicly available demographic data, including census reports and other local government data to ascertain whether a given market had a sufficient customer base. The type of research Manny’s Cookies was conducting is called ______.
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secondary
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The ______ is a financial report that shows what the company owes, and what it owns, including the shareholders’ stake, at a particular point in time.
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Correct Answer:
balance sheet
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______ is determined by accounting principles and includes accruals and noncash items such as depreciation and amortization. ______ only deals with actual cash transactions.
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Net income; Cash flow
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Which of the following is true with respect to financial projections for startups?
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Often entrepreneurs build their financial projections based on third-party data sources that are misinterpreted.
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The ______ (also known as the profit and loss statement) is a financial report that measures the financial performance of your business on a monthly or annual basis.
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income statement
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______ refers to the number of days a company’s cash is tied up in the production and sales process.
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Cash conversion cycle
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A ______ financial statement gives one an idea of how the actual statement will look if the underlying assumptions hold true.
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pro forma
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Which of the following relationships between financial statements is accurate?
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The ending cash balance on the cash flow statement is equal to the cash on the balance sheet.
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Which is true with respect to building pro forma financial statements?
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Pro forma financial plans must be both strategically compelling and operationally achievable.
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In Short-Term Debt the portion of long-term debt that must be paid within a year.
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True
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In shareholder equity the money that has been ________ plus the cumulative net profits and losses the company has generated.
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invested in the business
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Secondary research refers to data gathered from _______ such as industry publications, websites, government agencies, and so on.
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Secondary Research
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Definition of Retained Earnings
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The cumulative amount of profit retained by the company and not paid out in the form of dividends to owners.
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The price and timing of raw materials and other goods and services necessary to build, sell, and support productsThis statement relate to
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Purchasing Policy
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Primary research refers to data gathered by yourself through sources such as focus groups, interviews, and surveys
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Correct Answer:
True
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How pricing will be determined for your products and services.
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Products & services.
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Which statement is true about Prepaid Expenses?
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The payments the company has already made for services not yet received.
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The process and timing in which obligations to pay for goods and services received by the business will be paid is known as
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Payables Policy
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Short-term liabilities that do not fall into a specific category, such as
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Sales text & income text
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In operating profit the amount left over from revenue once all costs and expenses are subtracted
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True
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Net Income indicates:
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what is left after all costs, expenses, and taxes have been paid.
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Long-Term Investments assets that are
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more than 1 year old
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Obligation for debt that is due to be repaid in more than 12 months is best statement for
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Long-Term Debt
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Economic obligations of the company, such as money owed to lenders, suppliers, and employees is best statement for
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Liabilities
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Inventory moves from the _____
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business to the customer.
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Which of the correct statements is interest expense?
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The extent of the company’s debt burden as well as representing any interest owed on borrowed money.
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In intangible assets the value of patents, software programs, copyrights, trademarks, franchises, brand names, or assets that cannot be physically touched.
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True
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A financial report that shows revenue, expenses, and profit for a period of time, typically a month, quarter, or year is known as
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Income Statement
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DSO measures the number of days that it takes to collect on accounts receivable.
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True
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A measure of the number of days it takes you to pay your bills is best statement for
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Days Payable Outstanding
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DOI stand for in Entrepreneurship
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Days of Inventory
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Bills that must be paid within 1 year of the date of the balance sheet is best statement for___.
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Current Liabilities
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_______ assets that can be converted into cash within a year.
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Current Assets
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which process obligations to pay for products and services sold will be billed and collected.
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Credit Policy
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In compensation policy The level of compensation and benefits for each type of position in the business.
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True
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A financial report that details the inflows and outflows of cash for a company over a set period of time are called ?
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Correct Answer:
Cash Flow Statement
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The number of days a company’s cash is tied up in the production and sales process is known as
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Cash Conversion Cycle (CCC)
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In capital Stock the original amount the owners paid into the company plus any additional paid-in capital to purchase stock in the company.
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Correct Answer:
True
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Estimating revenues and costs from the smallest unit of sales, such as a day is known as ?
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Bottom-Up Method
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Backlog shows what the company owes, what it owns, including the shareholder’s stake, at a particular point in time ?
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Correct Answer:
Balance Sheet
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Orders that have been received but not delivered to the customer are called ?
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Correct Answer:
Backlog
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In accrued expenses costs incurred by the company for which no payment has been made.
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True
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Which of correct statement about Accounts Receivable?
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Money owed to the company for goods or services provided and billed to a customer.
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Money owed by a business to its suppliers.
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Correct Answer:
Accounts Payable
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