Chap013 - Chapter 13 - Small Business Accounting:...

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Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance Chapter 13 Small Business Accounting: Projecting and Evaluating Performance True / False Questions 1. (p. 406) One reason why accounting is important to a small business is that it shows how much your business is worth. TRUE Difficulty: Easy 2. (p. 406) Financial accounting is forward-looking and attempts to predict the results of management decisions. FALSE Difficulty: Medium 3. (p. 407) The accounting equation is simply stated as Assets = Liabilities – Owners' equity. FALSE Difficulty: Easy 4. (p. 407) Expenses are the value given up to obtain something that you want. FALSE Difficulty: Medium 5. (p. 409) The primary reason to acquire and use a computerized accounting system in your business is to ensure the accuracy of your accounting information. TRUE Difficulty: Medium 13-1
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Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance 13-2
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Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance 6. (p. 410) The most commonly used small business accounting systems include Turbotax. FALSE Difficulty: Medium 7. (p. 410) Regardless of your business's size, the one essential element of an accounting system is cash accounting that is accurate, easy to use and tracks all checks written and all deposits made. TRUE Difficulty: Medium 8. (p. 410) The final output of a computer system is a set of financial statements and reports. TRUE Difficulty: Medium 9. (p. 411) There are two formats for income statements: revenue-only format and, revenue and expense format. FALSE Difficulty: Easy 10. (p. 411) One difficulty in understanding and interpreting the income statements is the dispute over when to recognize revenues. TRUE Difficulty: Medium 13-3
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Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance 11. (p. 414) Net income is the most used item on the income statement. FALSE Difficulty: Hard 12. (p. 414) Statement of cash flows is also referred to as the statement of financial position. FALSE Difficulty: Medium 13. (p. 416) Liquidity is a measure of the ability of a business to meet both short-term and long- term obligations. TRUE Difficulty: Medium 14. (p. 416) The most common ratio used to estimate liquidity is the debt-to-total assets ratio. FALSE Difficulty: Medium 15. (p. 416) Financial flexibility of a business is a matter of judgment, whereas financial strength is an objective assessment. FALSE Difficulty: Hard 16. (p. 418) Cash flow statements can be either direct statements or indirect statements. TRUE Difficulty: Medium 13-4
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Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance 17. (p. 420) The greatest value of financial accounting for small business owners and managers is reporting the results of operations and the financial condition of the business to entities outside the business. TRUE
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This note was uploaded on 11/21/2009 for the course MNGT 422X taught by Professor Godsey during the Spring '09 term at UNL.

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Chap013 - Chapter 13 - Small Business Accounting:...

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