MIDTERM BusFin

Finance is concerned about how the players in a financial system acquire, spend, manage, and make other sound financial decisions concerning money and other financial resources.

• TRUE

• FALSE

The concept of finance are only applicable to established businesses.

• TRUE

• FALSE

It refers to an establishment for the deposit, custody, and issue of money, for making loans and discounts, and for making exchange of funds easier.

• Banks

• Capital market

• Insurance companies

• Money market

Knowledge of accounting is important in studying finance

• TRUE

• FALSE

• NEITHER

Financial statements are prepared in accordance with the generally accepted accounting principles

• TRUE

• FALSE

Accounting cycle is a series of recurring accounting steps or processes that span from the start to the end of a particular accounting period.

• TRUE

• FALSE

In a service type business, revenue is considered earned

• at the end of the month

• at the end of the year

• when the service is performed

• when the cash is received

Purchase of office tables by issuing an interest bearing promissory note will result in

• an increase in asset and liability

• an increase in asset and decrease in another asset

• an increase in liability and expenses

• an increase in asset and expense

Evaluation of financial statements can be performed through:

• Horizontal analysis

• Vertical analysis

• Ratio analysis

• All of the above

Vertical analysis expresses each item in a financial statement:

• in monetary terms

• as a percentage based on last year's amounts

• as a percentage based on an item in the current year's financial statements

• sorted accdg to their magnitude