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Chapter 9 Exam: Business Funding

True/False
Indicate whether the statement is true or false.
 

 1. 

If your cash receipts are less than your cash disbursements, your business has a negative cash flow.
 

 2. 

The Small Business Administration offers to guarantee your loan up to 75% if the amount is less than $150,000.
 

 3. 

Peer-to-Peer lending is also known as social lending.
 

 4. 

The break-even point tells you the amount of revenue you need to generate in order to cover your expenses.
 

 5. 

A lender checks an applicant’s credit report and discovers that the applicant is missing payments on a previous loan.  This action would be evaluted under the 3 C’s of Credit known as Capital.
 

 6. 

The Rule of Two guides you to expect everything to cost twice as much and take twice as long as you will think it will.
 

 7. 

Applying for a loan from a bank or a credit union would fall under the the art of bootstrapping.
 

 8. 

Fixed expenses include advertising and utilites.
 

 9. 

Typical start up codes include acquiring furniture and equipment.
 

 10. 

Financial statements reporting projections of financial data are called Preemptive Statements.
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 11. 

Cash invested in the business for the purpose of making a profit is called...
a.
Equity Capital
c.
Debt Financing
b.
Trade Credit
d.
Peer-to-Peer Lending
 

 12. 

Bootstrapping involves...
a.
Operating on as much cash as possible
b.
Using your business finances for personal reasons
c.
Keeping your personal and business assets separately
d.
Cutting all unnecessary expenses
 

 13. 

The amount of ownership a person has in a business is called...
a.
Fixed Assets
c.
Equity
b.
Liquid Assets
d.
Trade Credit
 

 14. 

Equity financing options include alll the following except...
a.
Personal Savings
c.
Banks and Credit Unions
b.
Venture Capitalists
d.
Family and Friends
 

 15. 

Exchanging goods and services for other goods and services, with no money exchanged, is called...
a.
Bootstrapping
c.
Venture Capital
b.
Bartering
d.
Equity Capital
 

 16. 

Which of the following statements about a line of credit is not true?
a.
It is a loan of unlimited funds for an unlimited time.
b.
It is a loan of a specific amount of money.
c.
It has a specific interest rate.
d.
It must be paid off in regular installments.
 

 17. 

Which of hte following is not an example of variable expenses?
a.
Utilities
c.
Advertising
b.
Office Supplies
d.
Insurance
 

 18. 

The financial progress of a business is shown in the pro forma...
a.
Cash Flow Statement
c.
Balance Sheet
b.
Income Statement
d.
Financial Statement
 

 19. 

Which of the following is not one of the five C’s of business?
a.
Cash Flow
c.
Co-Signor
b.
Collateral
d.
Conditions
 

 20. 

Another term for owner’s equity is...
a.
Net Worth
c.
Marginal Benefit
b.
Marginal Cost
d.
Liability
 

 21. 

Which of the following is NOT typically required for a small business loan application?
a.
Business Plan
c.
Recent Utility Bill
b.
Income Tax Statements
d.
Bank Statements
 

 22. 

A person who signs a loan with an applicant and takes on equal responsibility for repaying the loan is commonly referred to as a...
a.
Co-Signor
c.
Capital Architect
b.
Contributor
d.
Co-Conspirator
 

 23. 

When lenders evaluate a loan applicant, they often look at the economy with regards of the potential growth of a business.  In the 5 C’s of credit, this is referred to as...
a.
Capital
c.
Capacity
b.
Conditions
d.
Collateral
 

 24. 

One large start up cost for an inventory based business is the assortment of items a business has on hand to sell to customers.  The term used for these items is...
a.
Product
c.
Sellable Item
b.
Service
d.
Inventory
 

 25. 

Which of the following C’s does NOT apply to business loans?
a.
Cash Flow
c.
Capacity
b.
Character
d.
Capital
 

 26. 

A history of a loan applicants ability to create and pay debts is evaluated under the 5 C’s  of Credit under...
a.
Capital
c.
Cash Flow
b.
Conditions
d.
Character
 

 27. 

Liquid assets are..
a.
Items easily turned into cash.
b.
Items used in the operation of the business.
c.
Items found in a company warehouse.
d.
None of the above.
 

 28. 

Operating expenses whose amounts can change from month to month are known as...
a.
Fixed Expenses
c.
Daily Expenses
b.
Variable Expenses
d.
Overall Expenses
 

 29. 

It is important to have enough start up capital to remain in business for at least a year without making a profit.
a.
True
b.
False
 

 30. 

It is only after the break even point is reached that profits are earned.
a.
True
b.
False
 

Matching
 
 
Read the numbered definitions.  Choose the correct term from the list and record the letter next to the correct definition.
a.
Accounts Payable
f.
Operating Capital
b.
Accounts Receivable
g.
Owner’s Equity
c.
Break-Even Point
h.
Peer-To-Peer Lending
d.
Debt Financing
i.
Start-Up Capital
e.
Equity Financing
j.
Trade Capital
 

 31. 

Borrowing money for business purposes.
 

 32. 

The amount of revenue a business must generate in order to equal its expenses.
 

 33. 

Borrowing money via a website.
 

 34. 

One business granting a line of credit to another business for the purchase of goods and services.
 

 35. 

The money needed to support day-to-day operations.
 

 36. 

Money owed to a business by customers for goods and services.
 

 37. 

The difference between assets and liabilities.
 

 38. 

The cash used to start a business.
 

 39. 

Money a business owes to suppliers for goods and services received.
 

 40. 

Raising money for a busienss in exchange for a percentage of ownership.
 
 
Read the numbered definitions.  Choose the correct term from the list and record the letter next to the correct definition.
a.
Cash Flow
f.
Operating
b.
Financial Plans
g.
Profit Margin
c.
Income Statement
h.
Pro Forma
d.
Marginal Benefit
i.
Sales Forecasting
e.
Marginal Cost
j.
Start Up Costs
 

 41. 

A statement reports anticipated flow of cash into and out of the business.
 

 42. 

Reports the financial progress of a business.
 

 43. 

Financial statemetns based on the best estimate of future revenue and expenses.
 

 44. 

The goal of this document.is to project revenue and to make sure the business has enough products to sell.
 

 45. 

A summary of where a business is financially at the present time and future expectations.
 

 46. 

Teh initial expenses necessary to open the doors of a business.
 

 47. 

Day to day costs accrued in daily operations of the business.
 

 48. 

The amount by which the product sales exceed the cost of the busienss to produce them.
 

 49. 

Measuring potential gains of producing one more product that may sell.
 

 50. 

Measuring potential losses of producing one more product that might not sell.
 



 
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