Page 428 - Business Principles and Management

C HAPTER 15 A SSESSMENT

DETERMINE THE BEST ANSWER

13. Manual record-keeping systems have been replaced in most busi-
nesses by
a. accountants
b. simple checkbook systems
c. computers running accounting software programs
d. cash register tapes
14. Studies of differences between successful and unsuccessful new busi-
nesses find that successful businesses use
a. consultants
b. computers
c. budgets
d. none of the above
15. The two financial statements most used by businesses are
a. cash flow and capital assets record
b. tax and personnel records
c. income statement and balance sheet
d. accounts receivable and accounts payable records
16. An agency of the federal government that provides information,
advice, and assistance in obtaining credit and other financial sup-
port for small businesses is the
a. SBA
b. FDA
c. FCC
d. EEOC

APPLY WHAT YOU KNOW

17. Based on the Reality Check scenario at the beginning of the chapter,
explain the meaning of the following statement by Clark’s banker:
“Either your current assets are too low or your current liabilities are
too high. If you want us to continue your loan, you have to improve
your working capital.”
18. Can a piece of equipment such as a computer both depreciate and
become obsolete? Explain.
19. Why will an operating budget likely be more accurate if the com-
pany’s sales budget is prepared in advance and used as information
for the operating budget?
20. Why is a budget an important tool for managers to use when evalu-
ating current performance?
21. Discuss the accuracy of this statement: “The balance sheet tells you
whether you made a profit or a loss for the year.”
22. A net loss of $5,000 appears on an income statement. How would
this loss affect the capital section of the balance sheet?
23. If the average return on sales for all jewelry stores is 7 percent, how
would you judge the success of the Crown Corporation based on
the financial information presented in lesson 15.3?

415