Financial Planning II Unit 3 Test

Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:

• Bank Statement

• Cash Flow Statement

• Balance Sheet

• Income Statement

What accounting record would summarize a business’s profit or loss for a previous year?

• Balance Sheet

• Inventory Record

• Income Statement

• Bank Statement

A bank denies a business owner’s application for credit saying, “We feel that you would be unable to make the monthly payments because of your other debts.” What financial report did the bank review?

• Operating Budget

• Income Statement

• Budget

• Balance Sheet

Which of the following categories of information are found on a balance sheet:

• Assets, Liabilities, Margin

• Revenue, Expenses, Profit

• Income, Expenditures, Profit

• Assets, Liabilities, Owner Equity

Which of the following makes comparisons of the financial conditions at multiple organizations possible:

• Accounting Standards

• Bookkeeping

• Source Document

• Trial Balance

What type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?

• COD Method

• Check Method

• Accrual Method

• Cash Method

What type of accounting method would most likely be used by a small business owner who does not offer credit?

• Check Method

• Cash Method

• Accrual Method

Which of the following is a requirement for a good accounting system:

• It should provide needed information quickly.

• It should be updated annually.

• It should eliminate the need for an accountant.

• It should be replaced every two or three years.

For an accounting system to be useful to the business, the accounting information it contains must be

• recorded using the accrual method

• approved by the chief executive officer

• accurate and up to date

• posted by an accountant

What is the purpose of ethics?

• Ethics prevent problems from occurring.

• Ethics help people know how to do what is right.

• Ethics are punishments for those who make mistakes.