Builder's Guide to Accounting 07

Question 1

1. What is the SUMMARY OF PROFITS TO SALES report?

Answer 1

It shows NET PROFIT PER JOB TO GROSS INCOME PER JOB.
Ex: Customer A: Net profit = 2615
Gross Income = 55000
RATIO: 1:21, or 5%

Question 2

2. In some cases, you might decide to abandon PROFITABLE MARKETS because the RISKS ARE NOT WORTH THE REWARD. The risks include:

Answer 2

1. Investment in CAPITAL & EQUIPMENT
2. Personnel time
3. Management time
4. etc.

Question 3

3. In the SUMMARY OF PROFITS TO SALES report, a ratio of 1:21 means that:

Answer 3

the project yielded a PROFIT of 1 DOLLAR for EVERY 21 SALES DOLLARS.

Question 4

4. When would it be to your advantage to accept work which will bring on a NET LOSS?

Answer 4

See Ch 8

Question 5

5. One of the most elusive problems every business owner faces is:

Answer 5

planning for WORKING CAPITAL; that’s the cash you have on hand to pay the weekly bills.

Question 6

6. Accountants will tell you that a truly useful system is one that will:

Answer 6

help you plan ahead of time how much CASH you will have coming in and how much will be going out.