CHAPTER 12 FINANCIAL MGMT ACCOUNTING QUIZ

Business planning and decisions are guided by the basic financial equation: Revenue minus expenses equals profit or loss.

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• False

A payroll is the financial record of employee compensation, deductions, and net pay.

• True

• False

With direct deposit, an employer transfers net pay electronically into an employee's bank account.

• True

• False

Income and unemployment taxes as well as health insurance, Social Security, and Medicare are all payroll taxes.

• True

• False

The income that a business receives over a period of time is called profits.

• True

• False

The company's liabilities divided by the owner's equity is the net income ratio. See "Using Financial Information."

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• False

The main source of budget information that established businesses use to prepare a budget is the Small Business Administration.

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• False

An accounts receivable record identifies the companies from which credit purchase were made.

• True

• False

The operating budget is used to plan the amounts and timing for buying buildings, equipment, and other assets that will be used over a long time period.

• True

• False

The purpose of a business budget is to anticipate sources of income, anticipate amounts of income, and predict the types and amounts of expenses for a specific business activity or the entire business.

• True

• False