Funding Options
What is one disadvantage of debt financing?
A) Immediate cash outflow
B) Long-term financial obligation
C) Dilution of ownership
D) Loss of control
What is the accounting equation?
A) Assets = Liabilities + Equity
B) Profit = Revenue - Expenses
C) Revenue = Costs + Liabilities
D) Cash Flow = Operating Activities - Financing Activities
What is the purpose of a balance sheet?
A) To calculate profits and losses
B) To show a company's financial position at a specific point in time
C) To track cash inflows and outflows
D) To determine future projections
Why is fairness important in financial decision-making?
A) To ensure equal opportunity for employees
B) To maintain trust with stakeholders
C) To avoid unnecessary expenses
D) To prioritize investor profits
A company has assets of $150,000 and liabilities of $85,000. What is the owner’s equity?
Which type of financing involves selling shares of the company to raise funds?
A) Debt financing
B) Venture capital
C) Equity financing
D) Crowdfunding
C) Equity financing
Which of the following is considered an asset in a business?
A) Money owed to investors
B) Equipment owned by the company
C) Debt owed to suppliers
D) Taxes payable
Which financial statement details a company’s profitability over a time period?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Shareholder’s equity statement
What was the major ethical issue in the iBackPack case?
If a company’s liabilities are $45,000 and the owner's equity is $80,000, what are the total assets?
At which stage of a company's lifecycle are angel investors most likely to invest?
A) Startup phase
B) Expansion phase
C) Decline phase
D) Maturity phase
What does owner’s equity represent in the accounting equation?
A) The company’s profits over time
B) Future earnings potential
C) Assets minus liabilities
D) Total debts owed by the company
What are the three sections of a cash flow statement?
A) Assets, liabilities, and equity
B) Fixed costs, variable costs, and breakeven
C) Operating, investing, and financing activities
D) Revenue, expenses, and net income
How can an entrepreneur demonstrate accountability?
A company borrows $15,000 from a bank. If the company previously had $40,000 in assets and $25,000 in liabilities, what are the updated figures for assets and liabilities?
What is the primary difference between crowdfunding and traditional financing?
A) Crowdfunding involves large investors
B) Crowdfunding is more regulated
C) Crowdfunding uses small contributions from many individuals
D) Crowdfunding always involves equity
Why is it important to understand ALOE in accounting?
A) It summarizes a company’s financial status
B) It tracks day-to-day expenses
C) It calculates depreciation
D) It predicts future sales
What is the purpose of an income statement?
Which principle ensures decisions benefit society and the environment?
A company buys equipment worth $8,000 using cash. If total assets were initially $50,000, what are the assets after the purchase?
For loans exceeding what dollar amount is collateral typically required?
A) $5,000
B) $10,000
C) $25,000
D) $50,000
Which of the following is considered a fixed cost?
A) Rent
B) Raw materials
C) Labor wages per unit produced
D) Commissions
What does the statement of cash flows track?
Why is transparency essential when communicating with investors?
A company starts with $100,000 in assets, $50,000 in liabilities, and $50,000 in equity. The owner invests $20,000 more, and the company takes out a $30,000 loan but pays off $10,000 in liabilities. What are the final balances?