ch 12

Question 1

all income a business receives over a period of time

Answer 1

revenue

Question 2

costs of operating a business

Answer 2

expenses

Question 3

detailed plans for financial needs

Answer 3

budget

Question 4

plans income and expenses from beginning of a new business until it becomes profitable

Answer 4

start-up budget

Question 5

financial plan for ongoing operations of business for a specific period

Answer 5

operating budget

Question 6

estimate of the actual money received and paid out during a specific period

Answer 6

cash budget

Question 7

used to record and analyze the financial performance of a business

Answer 7

financial records

Question 8

what a company owns

Answer 8

assets

Question 9

what a company owes; needs to pay

Answer 9

liabilities

Question 10

value of the owners’ investment in the business

Answer 10

owner’s equity

Question 11

financial statement showing assets, liabilities, owner’s equity for a specific date

Answer 11

balance sheet

Question 12

financial statement showing revenue, expenses and net profit/loss for a specific period

Answer 12

income statement

Question 13

financial record of employee compensation, deductions and net pay

Answer 13

payroll

Question 14

form to track each employee’s pay history

Answer 14

payroll record

Question 15

employer transfers net pay electronically to employee’s bank account

Answer 15

direct deposit

Question 16

comparisons of a business’s financial elements that indicates how well the business is performing

Answer 16

financial performance ratios

Question 17

current assets compared to current liabilities

Answer 17

current ratio

Question 18

liabilities divided by owner’s equity

Answer 18

debt to equity ratio

Question 19

net profit of business compared to amount of owner’s equity

Answer 19

return on equity ratio

Question 20

total sales compared to net income for a specific period

Answer 20

net income ratio

Question 21

differences between actual and budgeted performance

Answer 21

discrepancies