Book Keeping and Business Management

Question 1

Effective management requires that decisions be made at the

Answer 1

lowest level practible in the organization

Question 2

executive ability can be realized to the fullest extend only when

Answer 2

-the executive is relieved of all unneccesary details or special work
-standards of performance are established, definete plans and plicy formulated
-adequate controls are installed, then the executive may direct his time and attention to those matters which are the exception to the normal operation

Question 3

the basic principles and many techniques used by business to control operations and assist human judgement in management are applicable to

Answer 3

small and large businesses

Question 4

where is overhead expense covered

Answer 4

by proper cost estimating

Question 5

management should always remeber to consider each problem from

Answer 5

the other persons point of view

Question 6

the success or failure of a business depends largely upon

Answer 6

the proper handling and treatemtn of personnel

Question 7

a good financial policy is

Answer 7

cash plus goods receivable exceeed current liabilities

Question 8

one of the most consisten failings of managment is in neglecting to instruct personell as to their

Answer 8

responsibilities and delegating adequate authority to excercise these responsibilities

Question 9

the logical source from which to obtain the amount and percentage of overhead is the

Answer 9

income and expense statement (profit and loss statement)

Question 10

when the sales volume expands, the net working capital is not enough to meet all the commitments as they become due; the contractor then tends to bid the job at cost or below cost in order to obtain capital to pay off the previous obligations and liabilities. the next thing that may happen may be

Answer 10

bankrupcy

Question 11

a contractor who will take the neccessary time to study and apply which of the following basic principles will find himself well on the way toward establishing a sound financial policy

Answer 11

investment in the net fixed assets should be in proper proportion to owners equity

Question 12

fixed assest are

Answer 12

such things as land, buildings, trucks, equipment. it is assets used to run the business and is not purchased for resale

Question 13

in book keeping, fixed assets are listed as

Answer 13

assets on the balance sheet

Question 14

fixed assets are usually shown on the balance sheet as

Answer 14

cost less depreciation

Question 15

the most severe type of competition is between managements. businesses do not compete (t/F)

Answer 15

True

Question 16

in bookkeeping, ratios as used extensively indicate the relationship of one number to another. the ratio is computed by dividing the first named item by the second named item (t/f)

Answer 16

True

Question 17

some popular ratios are

Answer 17

cash plus goods receivable to current liabilities

Question 18

the ratio of investment in net fixed assets to tangible net worth is a ratio that means it is unsafe for any business to invest too much of its capital in fixed assets (t/f)

Answer 18

True

Question 19

as an example of the above ratio, suppose the net fixed assets are $9,500 divided by owners equity or net worth of $33,000 which would be?

Answer 19

28.8 ratio

Question 20

the ratio of sales to the net working capital would be the dividing of annual sales by the net capital; this will show the turnover of net working capital. Too high a turnover will lead to overtrading an shows there is not enough net working capital for the sales volume (t/f)

Answer 20

true

Question 21

the gross profit is

Answer 21

-net profit plus total expenses
-sales minus cost of sales

Question 22

place holder

Question 23

the functional areas of management include

Answer 23

planning and coordination

Question 24

the behavioral aspects of management include

Answer 24

human relations and cooperation

Question 25

the most difficult part of changing roles from employee to contractor (manager) may be in developing the clear understanding of what is important for successful management. Management theory has been divided into two different areas

Answer 25

functional and behavioral

Question 26

in order to control costs, a small contractor must

Answer 26

schedule and coordinate the overall job

Question 27

subcontractrs should be chosen on the basis of their ability to perfomr a job as well as the price that they woute. delyaed completion and unprofessional work quickly eliminate the potential savings of the lowest bid (t/f)

Answer 27

True

Question 28

a balance sheet shows

Answer 28

assets, liabilities, and net worth

Question 29

on a job that utilizes multiple trades, it is best to plan the total job in phases according to the trades involved. which of the following is the more complex scheduling system used in general construction

Answer 29

pert chart

Question 30

one of the most common reasons that contractors fail is because they do not intelligently plan the jobs for several customers that they are working on at the same time. if a contractor takes the time to use one ____ chart for each job, he could then utilize his man power by comparing all of the time requirements on all of the jobs.

Answer 30

-critical path analysis -percentage

Question 31

as shown on an invoice for materials, the term: 2%-10th prog. net 15 means:

Answer 31

a 2% discount can be taken off the invoice total if paid within 10 days of billing, etc

Question 32

accurate acconting records are essential for

Answer 32

effective management

Question 33

cooperation between employees cannot be dictated by management, but it can be acheived by

Answer 33

leadership by management

Question 34

management must utilize good planning in order to inure that the business always has available an adequate supply of money, resources, equipment and

Answer 34

capable people

Question 35

effective communication within an organization is quite important and it imporves

Answer 35

morale and productivity

Question 36

a contracting business need

Answer 36

-sufficient resources for attracting business -an area with sufficient construction activity -well trained employees

Question 37

controls within a business operation are neccessary to evaluate the progress of a business as compared to

Answer 37

the plans

Question 38

each construction supervisior should have at least one employee woking under his supervision, but never more than

Answer 38

a reasonable number

Question 39

what is most difficult for a contractor to estimate when preparing to submit a bid

Answer 39

labor

Question 40

which accounting method constantly records the actual cost of construction

Answer 40

accrual concept of accounting

Question 41

a balance sheet will show

Answer 41

assets and liabilities at a certain time

Question 42

an income statemetn will show

Answer 42

revenues and expenses over an extended period of time

Question 43

overhead is

Answer 43

costs not directly assignable to a particular job

Question 44

effective job costing requires that you

Answer 44

set up customer account cards (ledger) for each job

Question 45

FICA (social security taxes) are levied on

Answer 45

both employers and employees

Question 46

items listed in a contractors accounts receivable ledger represent

Answer 46

money owed to the business

Question 47

when a contractor designates proceeds of a contract to go to the supplier, this is known as

Answer 47

assigned credit

Question 48

the advantage of establishing a "line of credit" with a bank is that money is received how often

Answer 48

as needed

Question 49

monies owed to suppliers are recorded under which of the following categories listed on the balance sheet

Answer 49

accounts payable

Question 50

real estate taxes would be listed under which category on the balance sheet

Answer 50

accrued expenses payable

Question 51

what are fixed liabilities

Answer 51

long term liabilities

Question 52

space holder

Question 53

insurance premiums, paid in full for an entire year in advance, would be put under which category on the balance sheet

Answer 53

prepaid expenses

Question 54

depreciation is taken on which of the companies assets

Answer 54

fixed assets

Question 55

when using a straight line depreciation, the dollar amount of the depreciation for that item

Answer 55

stays the same each year

Question 56

which of the following best defines depreciation

Answer 56

an expense which will decrease taxes

Question 57

on a balance sheet, depreciation of fixed assets is shown under which category

Answer 57

property, plant and equipment

Question 58

the problem with a separate bank account for accounts payable is that

Answer 58

-you could double post an account by mistake -you have two blank accounts to balance -you must reconcile payables to actual payments each month

Question 59

recording income earned and cash received on one single form is

Answer 59

practical and will also help control accounts receivable records

Question 60

an income journal always consists of

Answer 60

credits and debits of equal value

Question 61

when you record income and receipts, you must keep track of

Answer 61

-cash received and income earned -changes in accounts receivable balances -the job cash status

Question 62

durring september, a contractor earned $57,300 in income and incurred costs of $42,100 and expenses of $3,700. cash receipts for the same month were $44,400 and payments total $45,800. on a cash basis, net profit or loss for the month was

Answer 62

$(1,400)

Question 63

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Question 64

accrual acounting is a method in which

Answer 64

income is recorded when earend and expenses are recorded when incurred

Question 65

a contractor should use his bookkeeping books for

Answer 65

-establishing and maintaining his goals -keeping track of costs -estimating taxes

Question 66

a builder starts a construction company with $100,000 in cash and other assets. a year later, the companies income statement shows the sales were $85,000 and net profit was $9,500. the return on investment was

Answer 66

9.5%

Question 67

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Question 68

the total of all entries for receipts would appear in the

Answer 68

-receipts journal where all earned and paid income is recorded -accounts receivable journal where all records are listed alphabetically by customer name -general ledger which is used to record all transactions

Question 69

to increase assets that are generally represented by debit balances you would

Answer 69

debit the assets

Question 70

to increase liabilities that are generally represented by credit balances, you would

Answer 70

credit the liability

Question 71

to increase owners equity that is generally represented by credit balances, you would

Answer 71

credit the owners equity

Question 72

to decrease liabilities that are generally represented by credit balances, you would

Answer 72

debit the liability

Question 73

to decrease owners equity that is generally represented by credit balances, you would

Answer 73

debit the owners equity

Question 74

to decrease owners equity that is generally represented by credit balances, you would

Answer 74

debit the owners equity

Question 75

space holder

Question 76

what is the most accurate concerning a general partnership business

Answer 76

the business terminates upon the death of a partner

Question 77

in contractural language what does consideration mean

Answer 77

something of value

Question 78

only in cases of public ____ shall the primes total bid be permitted in excess of one half of one percent without specifiying a subcontractor

Answer 78

emergency

Question 79

____ is a way of calculating working capital substituting quick assets for current assets

Answer 79

quick ratio

Question 80

____ is shown on the balance sheet as a direct deduction from a fixed asset and becomes an expense item on the income and expense statement

Answer 80

depreciation

Question 81

what is the differance between total current liabilities and total current assets

Answer 81

working capital

Question 82

company vehicle insurance is listed on an income statement under operating expenses (t/F)

Answer 82

true