PRM EXAM 2 |126
QUESTIONS | WITH
ALREADY SCORED A+
SOLUTIONS!!
PRM
Evatee 8/3/24 PRM
,PRM EXAM 2 |126 QUESTIONS | WITH
ALREADY SCORED A+ SOLUTIONS!!
Capital needs for setup Answer - (operations taking place before business
opening)
Lease deposit and renovation
Equipment and fixtures
Inventory
Licenses and permits
Capital needs for start-up Answer - (used just prior to business opening; 2-3
weeks before and after opening)
Decorative fixtures
Office supplies
Promotional expenditure
Types of capital and definitions Answer - Working capital: money available to
carry on day-to day activities
Short-term capital: money borrowed to finance obligations over short time
period
Long-term capital: longer time period (as much as 10 years)
Sources for long-term capital Answer - Personal funds
Equity financing (selling partial ownership to investors)
, Debt financing: loans with interest
Sources of equity financing Answer - Partner
-General: helps with management
-Limited: not involved in mgmt
Relative
Friend
Venture capitalist
Stocks
-Common: max return on investment
-Preferred: gives investor first prefernce on company assets after debtors
receive their money
-Convertible preferred stocks
Sources of debt financing Answer - Commercial banks
Commercial finance companies
Life insurance companies
Consumer finance companes
Government (Samll Business Administration)
Suppliers
Miscellaneous
What is the business entity concept? Answer - Every business is treated as a
separate entity, distinct from owners and every other business
What is the cost principle? Answer - All goods and services purchased are
recorded at cost (does not reflect current worth)
QUESTIONS | WITH
ALREADY SCORED A+
SOLUTIONS!!
PRM
Evatee 8/3/24 PRM
,PRM EXAM 2 |126 QUESTIONS | WITH
ALREADY SCORED A+ SOLUTIONS!!
Capital needs for setup Answer - (operations taking place before business
opening)
Lease deposit and renovation
Equipment and fixtures
Inventory
Licenses and permits
Capital needs for start-up Answer - (used just prior to business opening; 2-3
weeks before and after opening)
Decorative fixtures
Office supplies
Promotional expenditure
Types of capital and definitions Answer - Working capital: money available to
carry on day-to day activities
Short-term capital: money borrowed to finance obligations over short time
period
Long-term capital: longer time period (as much as 10 years)
Sources for long-term capital Answer - Personal funds
Equity financing (selling partial ownership to investors)
, Debt financing: loans with interest
Sources of equity financing Answer - Partner
-General: helps with management
-Limited: not involved in mgmt
Relative
Friend
Venture capitalist
Stocks
-Common: max return on investment
-Preferred: gives investor first prefernce on company assets after debtors
receive their money
-Convertible preferred stocks
Sources of debt financing Answer - Commercial banks
Commercial finance companies
Life insurance companies
Consumer finance companes
Government (Samll Business Administration)
Suppliers
Miscellaneous
What is the business entity concept? Answer - Every business is treated as a
separate entity, distinct from owners and every other business
What is the cost principle? Answer - All goods and services purchased are
recorded at cost (does not reflect current worth)
