Entrepreneurship Quiz- Finance And Business

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| By Leona

Leona

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Quizzes Created: 1 | Total Attempts: 1,002

Questions: 9 | Attempts: 1,002 | Updated: Mar 21, 2023

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Entrepreneurship Ideas in Action, 3rd Edition

Questions and Answers

1.

Which of the following is not a financial statement needed for potential lenders and investors?
- A.
  
  Cash flow statement
- B.
  
  Balance sheet
- C.
  
  Loss statement
- D.
  
  Income statement
Correct Answer
C. Loss statement

Explanation
A loss statement, also known as an income statement, is a financial statement that shows a company's revenues, expenses, and net income or loss over a specific period. It provides information about the company's profitability and financial performance. Potential lenders and investors typically review the income statement to assess the company's ability to generate profits and meet its financial obligations. Therefore, the loss statement is indeed a financial statement needed for potential lenders and investors.

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2
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2.

To prepare a Pro Forma Cash Flow Statement, you must forecast your:
- A.
  
  Revenues and operating expenses
- B.
  
  Profits
- C.
  
  Assets and liabilities
- D.
  
  Debt capital
Correct Answer
A. Revenues and operating expenses

Explanation
To prepare a Pro Forma Cash Flow Statement, you must forecast your revenues and operating expenses. This statement is a financial tool that helps in predicting the future cash inflows and outflows of a business. By forecasting revenues, businesses can estimate the amount of money they expect to generate from sales or services. Similarly, forecasting operating expenses allows businesses to estimate the costs associated with running their operations. By accurately predicting these two factors, a Pro Forma Cash Flow Statement can provide insights into the future cash position of a business and help with financial planning and decision-making.

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3.

Money loaned to a business with the understanding that the money will be repaid, with interest, in a certain time period is:
- A.
  
  Equity capital
- B.
  
  A loan guarantee
- C.
  
  Venture capital
- D.
  
  Debt capital
Correct Answer
D. Debt capital

Explanation
Debt capital refers to money that is loaned to a business with the expectation that it will be repaid, along with interest, within a specific timeframe. This type of capital is typically provided by banks, financial institutions, or individual lenders. Unlike equity capital, which involves ownership in the business, debt capital does not grant any ownership rights to the lender. Instead, it is a form of financing that the business must repay according to the agreed-upon terms. This distinction sets debt capital apart from other options such as equity capital, loan guarantees, or venture capital.

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4.

The assets section of a balance sheet includes:
- A.
  
  Fixed assets
- B.
  
  Accounts receivable
- C.
  
  Allowance for uncollectible accounts
- D.
  
  All of these
Correct Answer
D. All of these

Explanation
The assets section of a balance sheet includes fixed assets, which are long-term tangible assets such as property, plant, and equipment. It also includes accounts receivable, which are amounts owed by customers for goods or services provided on credit. Additionally, it includes the allowance for uncollectible accounts, which is a contra-asset account used to estimate and record potential losses from customers who may not pay their debts. Therefore, the correct answer is "all of these" as all these items are included in the assets section of a balance sheet.

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5.

All of the following are important types of insurance for your business except:
- A.
  
  Casual insurance
- B.
  
  Workers' compensation
- C.
  
  Life insurance
- D.
  
  Property insurance
Correct Answer
A. Casual insurance

Explanation
Casual insurance is not an important type of insurance for your business. Casual insurance typically refers to insurance coverage for accidents or injuries that occur on your business premises or as a result of your business operations. However, this type of coverage is usually covered under general liability insurance or other types of insurance policies. Therefore, it is not considered a separate and important type of insurance for your business.

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6.

All businesses face the risk of:
- A.
  
  Credit card fraud
- B.
  
  Robbery
- C.
  
  Shoplifting
- D.
  
  Employee theft
Correct Answer
B. Robbery

Explanation
Robbery is a risk that all businesses face. It involves the act of forcefully taking someone's property, typically money or valuable items, by threat or force. This risk exists regardless of the type or size of the business. Robbery can occur in various settings, such as retail stores, banks, or even online businesses. It is important for businesses to implement security measures, such as surveillance systems, alarms, and training for employees, to minimize the risk of robbery and ensure the safety of their customers and staff.

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7.

The reason a bank may turn down your loan application is:
- A.
  
  You have not owned a business before
- B.
  
  A start-up business is less likely to default on a loan
- C.
  
  Your business plan is poorly written
- D.
  
  You have invested too much of your own money
Correct Answer
C. Your business plan is poorly written

Explanation
A poorly written business plan can be a significant reason for a bank to turn down a loan application. A well-written business plan is crucial as it provides a detailed outline of the business's goals, strategies, financial projections, and potential risks. It helps the bank assess the viability and profitability of the business, its ability to generate sufficient cash flow, and the likelihood of loan repayment. A poorly written plan may lack clarity, coherence, or fail to address essential aspects, making it difficult for the bank to evaluate the business's potential and the borrower's ability to repay the loan.

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8.

Installing mounted video cameras can help to:
- A.
  
  Prevent robberies
- B.
  
  Prevent or reduce shoplifting
- C.
  
  Prevent employee theft
- D.
  
  All of these
Correct Answer
D. All of these

Explanation
Installing mounted video cameras can help to prevent robberies by acting as a deterrent for potential thieves who are aware that they are being monitored. It can also help to prevent or reduce shoplifting by providing evidence of theft and deterring individuals from attempting to steal. Additionally, video cameras can help prevent employee theft by monitoring employee behavior and discouraging dishonest actions. Therefore, the correct answer is all of these, as installing mounted video cameras can contribute to preventing all the mentioned types of theft.

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9.

Write the accounting equation and define each element of it.

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Current Version
Mar 21, 2023

Quiz Edited by
ProProfs Editorial Team
Nov 09, 2009

Quiz Created by
Leona

Entrepreneurship Quiz- Finance And Business

Which of the following is not a financial statement needed for potential lenders and investors?

To prepare a Pro Forma Cash Flow Statement, you must forecast your:

Money loaned to a business with the understanding that the money will be repaid, with interest, in a certain time period is:

The assets section of a balance sheet includes:

All of the following are important types of insurance for your business except:

All businesses face the risk of:

The reason a bank may turn down your loan application is:

Installing mounted video cameras can help to:

Write the accounting equation and define each element of it.