BUS 101 Exam 2 (Ch. 6-9) Professor John Caslione
questions with verified answers
1 leverage ratio Ans✓✓✓debt to owner's equity
1 liquidity ratio Ans✓✓✓current ratio
2 main functions of managerial accountants Ans✓✓✓budgeting and
forecasting
2 types of accounting Ans✓✓✓financial and managerial accounting
2 types of corporations Ans✓✓✓C corporation and S corporation
2 types of liabilities Ans✓✓✓1. short-term
2. long-term
2 types of owner's equity Ans✓✓✓1. Retained Earnings
2. common stock
3 activities in the statement of cash flows Ans✓✓✓operating, investing,
financing
3 broad ratio categories Ans✓✓✓profitability, liquidity, and leverage
,3 essential elements of a general partnership Ans✓✓✓1. sharing of
profits
2. a joint ownership of the business
3. an equal right to be involved in the management of the business
3 key advantages of franchises Ans✓✓✓1. significant start-up costs and
ongoing fees, reducing earning potentials
2. rules and regulations imposed by franchisor to ensure a uniform
product or service across all establishments
3. if one franchisee messes up, all franchisees receive the backlash
3 key advantages of franchises Ans✓✓✓1. the ability to work as an
independent businessperson, yet obtain the advantages of the regional or
national organization
2. essential benefits like; established brand name, help with choosing a
location and provided training
3. easier time establishing a line of credit or getting a loan
3 key advantages of partnerships Ans✓✓✓1. combined skills and
competence of two or more persons can exceed that of a single person
2. partners can trade responsibilities
3. No double taxation
, 3 key advantages of sole proprietorships Ans✓✓✓1. Owner has
complete decision-making control
2. Owner keeps all of the profits
3. No double taxation
3 key disadvantages of partnerships Ans✓✓✓1. general partners are
subjected to unlimited liability
2. more difficult to end a partnership
3. risk of disagreements
3 key disadvantages of sole proprietorship Ans✓✓✓1. owner alone
bears the burden of any losses or liabilities incurred
2. all the resources to start up the business are the responsibility of the
owner
3. Unlimited liability; business debt is personal debt
3 profitability ratios Ans✓✓✓1. Earnings per share
2. Return on Equity
3. Return on Assets
3 types of assets Ans✓✓✓1. current
2. long-term
3. intangible
questions with verified answers
1 leverage ratio Ans✓✓✓debt to owner's equity
1 liquidity ratio Ans✓✓✓current ratio
2 main functions of managerial accountants Ans✓✓✓budgeting and
forecasting
2 types of accounting Ans✓✓✓financial and managerial accounting
2 types of corporations Ans✓✓✓C corporation and S corporation
2 types of liabilities Ans✓✓✓1. short-term
2. long-term
2 types of owner's equity Ans✓✓✓1. Retained Earnings
2. common stock
3 activities in the statement of cash flows Ans✓✓✓operating, investing,
financing
3 broad ratio categories Ans✓✓✓profitability, liquidity, and leverage
,3 essential elements of a general partnership Ans✓✓✓1. sharing of
profits
2. a joint ownership of the business
3. an equal right to be involved in the management of the business
3 key advantages of franchises Ans✓✓✓1. significant start-up costs and
ongoing fees, reducing earning potentials
2. rules and regulations imposed by franchisor to ensure a uniform
product or service across all establishments
3. if one franchisee messes up, all franchisees receive the backlash
3 key advantages of franchises Ans✓✓✓1. the ability to work as an
independent businessperson, yet obtain the advantages of the regional or
national organization
2. essential benefits like; established brand name, help with choosing a
location and provided training
3. easier time establishing a line of credit or getting a loan
3 key advantages of partnerships Ans✓✓✓1. combined skills and
competence of two or more persons can exceed that of a single person
2. partners can trade responsibilities
3. No double taxation
, 3 key advantages of sole proprietorships Ans✓✓✓1. Owner has
complete decision-making control
2. Owner keeps all of the profits
3. No double taxation
3 key disadvantages of partnerships Ans✓✓✓1. general partners are
subjected to unlimited liability
2. more difficult to end a partnership
3. risk of disagreements
3 key disadvantages of sole proprietorship Ans✓✓✓1. owner alone
bears the burden of any losses or liabilities incurred
2. all the resources to start up the business are the responsibility of the
owner
3. Unlimited liability; business debt is personal debt
3 profitability ratios Ans✓✓✓1. Earnings per share
2. Return on Equity
3. Return on Assets
3 types of assets Ans✓✓✓1. current
2. long-term
3. intangible
