Business Financing
The majority of entrepreneurs raise startup funds from:
a. Angel investors
b. Crowdfunding
c. Commercial loans
d. Family, friends, and personal accounts
D. Family, Friends, and Personal Accounts
In addition to the financial support, one of the benefits of being funded by a venture capital firm is that it comes with:
a. Full control of the business
b. Guidance and advice
c. High publicity
d. The freedom to make decisions
B. Guidance and Advice
Any profits that are earned and reinvested into a company are called:
a. Debt financing
b. Line of credits
c. Retained earnings
d. Revolving credits
C. Retained Earnings
Cash and other assets expected to be converted into cash in the next year are called:
a. Current assets
b. Debt financing
c. Equity financing
d. Retained earnings
A. Current Assets
A financial statement that identifies a company’s sources and uses of cash in a given accounting period is called:
a. A balance sheet
b. An income statement
c. A statement of cash flows
d. A statement of owner’s equity
C. Statement of Cash Flows
This short-term cash equivalent IOU is issued by the U.S. Federal government and usually mature in less than 26 weeks.
A. Money Market Mutual Funds
B. U.S. Treasury Bills (T-Bills)
C. Accounts Receivable
D. Commercial Paper
B. U.S. Treasury Bills (T-Bills)
Which of the following is NOT a source of short-term funding for a business?
a. Commercial paper
b. Factoring
c. Line of credit
d. Trade credit
C. Line of credit
Short-term promissory notes issued by large corporations to finance their business are called:
a. Commercial paper
b. Covenants
c. Factors
d. Short-term bank loans
A. Commercial Paper
Money owed to a company by its debtors is called:
a. Financial account
b. Accounts receivable
c. Current assets
d. Retained earnings
B. Accounts Receivable
A written financial plan for business operations developed for a specific period of time is called:
a. A balance sheet
b. A budget
c. An income statement
d. An operating plan
B. Budget
The process of funding a new business or venture by a large number of investors over the internet is called:
a. Angel investors
b. Crowdfunding
c. Peer-to-peer lending
d. Venture capital
B. Crowdfunding
Instead of companies waiting for her customers to pay what they owe, Jasmine sold her accounts receivable, at a discount, to another company. This company will then collect the full amount from Jasmine’s customers, making a profit. This type of financing is called:
a. Factoring
b. Retained earnings
c. Short-term bank loans
d. Using trade credit
A. Factoring
Raising funds for a company by issuing bonds or borrowing from banks are examples of:
a. Debt financing
b. Equity financing
c. Retained earnings
d. Trade credit
A. Debt Financing
Stocks of finished goods, materials, and work-in-progress parts that companies hold as a part of doing business are called their:
a. Accounts receivable
b. Assets
c. Current assets
d. Inventories
D. Inventories
A presentation of a company’s operational and financial budgets that represents the company’s overall plan of action for a specified time period is called a:
a. Capital budget
b. General budget
c. Master budget
d. Startup budget
C. Master Budget
John is interested in investing some of his money. His friend told him about investing in startup companies with high growth potential. He explained that in return for his investments, he gets a share of ownership in a company that he thinks will likely grow and make him money. John would be considered:
a. An angel investor
b. A commercial lender
c. A nonprofit sponsor
d. A venture capitalist
A. An Angel Investor
Ben’s Hardware Store receives most of its goods from suppliers without requiring payment at the time of delivery, essentially being able to “buy now, pay later.” This type of financing is called:
a. Factoring
b. Retained earnings
c. Short-term bank loans
d. Using trade credit
D. Using Trade Credit
Which of the following is NOT an example of long-term financing for a business?
a. Debt financing
b. Equity financing
c. Retained earnings
d. Trade credit
D. Trade Credit
A financial statement that identifies and reports the value of a company’s assets, liabilities, and owner’s equity is called:
a. A balance sheet
b. An income statement
c. A statement of cash flows
d. A statement of owner’s equity
A. Balance Sheet
A budget that projects the income and expenses from the beginning of a new business until it is expected to become profitable is called a:
a. Capital budget
b. General budget
c. Master budget
d. Startup budget
D. Startup Budget
Websites like Upstart.com and Prospermarketplace.com bring together investors and borrowers that both can benefit financially. These would be examples of:
a. Commercial loans
b. Debt Financing
c. Peer-to-peer lending
d. Venture capital firms
C. Peer-to-Peer Lending
In order to avoid negotiating a separate loan each time they need more funds, many companies work out arrangements with their bankers to obtain pre-approval so that they can draw on funds as needed. An example of this would be using:
a. A factor
b. A line of credit
c. A trade credit
d. Retained earnings
B. A Line of Credit
Selling newly issued stock is an example of:
a. Commercial paper
b. Debt financing
c. Equity financing
d. Retained earnings
C. Equity Financing
A financial statement that reports the revenues, expenses, and net income that resulted from a company’s operations over an accounting period is called:
a. A balance sheet
b. An income statement
c. A statement of cash flows
d. A statement of owner’s equity
B. Income Statement
What does "2/20 net 30" mean?
The invoice is due in 30 days, but you can receive a 2% discount if it is paid within 20 days.