Unit 4 CHALLENGE QUESTIONS NEW TEST FOR THE COMING EXAMS ALL CORRECTLY ANSWERED QUESTIONS

Unit 4 CHALLENGE QUESTIONS NEW TEST FOR THE COMING EXAMS ALL CORRECTLY ANSWERED QUESTIONS An example of an expense related to long term financing is __________. • a.) buying supplies to maintain farm equipment • b.) paying wages to farmworkers • c.)buying farmland to manage more cows • d.) paying an agency to create a marketing campaign Which of the following is an example of financial accounting? • a.)Filing annual financial reports • b.) Setting quarterly performance goals • c.) Creating budgets for company departments • d.) Predicting internal forecasts for future sales Which of the following is an example of risk transfer? • a.) Bruce and Linda purchase an insurance policy so that the risk associated with a fire would be assumed by a third party. • b.) Bruce and Linda take on a new business venture even though they could lose some of their current business relationships. • c.) Bruce and Linda evaluate the potential losses they could incur and take precautionary actions to reduce the risk involved. • d.) Bruce and Linda stop any and all practices that are risky enough to result in a loss to the business. Which of the following items would be included in an income statement? • a.) Owner's equity value • b.)Costs of goods sold • c.) Money spent investing in long-term bonds • d.) Long-term debt amounts The __________ is used to evaluate how likely a company is to pay off its debts. • a.)current ratio • b.) cash budget • c.) capital budget • d.) debt to owner's equity ratio Cows make poor currency because they eventually die. Which of the following features of money do cows thus lack? • a.) Portability • b.) Durability • c.) Divisibility • d.)Stability Higher ________ mean a bank has to pay a higher rate on the money it borrows from the Federal Reserve. • a.) money supply needs • b.)discount rate controls • c.) reserve requirements • d.) inflation limits Which type of non-profit institution requires that a person must meet certain guidelines to become a member before they can take advantage of the institution's services? • a.) Non-deposit institution • b.)Credit union • c.) Savings and loan association • d.) Mutual savings bank Which of the following statements accurately describes short term financing options? • a.) Short term financing would require a business to pay the money back in up to five years. • b.) The short term financing options are more difficult to obtain than long term options. • c.) The short repayment period is less risky for a business as the borrower. • d.)The amount a business needs to borrow is small compared to a long term loan. Which of the following statements accurately describes short term financing options? • a.) A business will likely be charged a higher interest rate on its loans than an individual borrowing money. • b.) Short term financing is easier to get than long term financing because it is a necessary aspect of doing business. • c.)A business will likely be charged interest if they take out a promissory note. • d.) Short term financing would require a business to provide collateral. Which of the following statements accurately describes short term financing options? • a.) The short term financing options are considered a type of secured financing. • b.) The need for short term financing indicates that a business is in financial distress. • c.) The short term financing options must be repaid within a one year period. • d.) The lender usually charges the borrower a discount rate of interest. Which of the following is an example of how a company uses some of its assets to borrow money? • a.) Using the money the restaurant expects to receive from customers on sales to get a loan • b.) Financing a loan for four years to purchase new kitchen equipment • c.) Using collateral to open a revolving line of credit • d.) Making an agreement with a supplier to purchase items and pay them in 90 days Which of the following describes a bond? • a.) A group that represents the owners of a bond • b.)An instrument that pays the buyer a set amount plus interest at the end of a defined term • c.) A process for taking on a loan and agreeing to pay back the borrowed funds • d.) A specific period when the payout will occur for a bond Which of the following scenarios describes a capital gain? • a.) An investor earned this when he sold shares at a higher price than he purchased the shares. • b.) An investor who owned this item from a company has limited voting rights on major company issues. • c.) A company forced an investor to pay back her 200 shares of this item. • d.) A company paid an investor $.50 per share from its earnings each quarter. Which of the following statements is true regarding angel investors? • a.)An angel investor is more likely to be a single individual. • b.) An angel investor is interested in funding the growth of a business • c.) An angel investor usually charges management fees and interest on funding loans. • d.) An angel investor does not expect a share of ownership for investing funds.