Financial Managment week 1

Question 1

What are the four accounts involved in every sale?

Answer 1

Sales
How paid
Inventory
Cost of sale

Question 2

True or false: all balance sheet and income statement accounts are zeroed-out at the end of each month?

Answer 2

False

Question 3

What runs a dealership business from a financial perspective?

Answer 3

Cash

Question 4

What are the 2 main groups of liabilities called?

Answer 4

Current liabilities

Long term liabilities

Question 5

True or false: in a month that a fixed asset is fully depreciated, it is removed from the fixed asset schedule since it has a zero balance?

Answer 5

False

Question 6

What does the cash gap represent?

Answer 6

The number of days between when cash goes out and cash is collected

Question 7

There is no correlation between profit and

Answer 7

Cash

Question 8

Cash tied-up in excess inventories and receivables is called?

Answer 8

Frozen capital

Question 9

True or false: it is possible to outsell your cash

Answer 9

True

Question 10

What are the four critical inventories?

Answer 10

New vehicle inventory
Work in process inventory
Used vehicle inventory
Parts inventory

Question 11

In what order do assets appear on the balance sheet?

Answer 11

Order of liquidity with the most liquid at the top

Question 12

How are liabilities listed on the balance sheet?

Answer 12

From most current to least current, with most current at the top

Question 13

What are the four critical receivables?

Answer 13

Vehicle receivables
Contracts in transit
Service and parts receivables
Warranty receivables

Question 14

True or false: depreciation expense is the gradual conversion of the cost of an asset to an expense?

Answer 14

True

Question 15

What are the three areas on a Finacial statement that manufactures focus on?

Answer 15

Working capital
Cash
Inventory trust position

Question 16

What are the three main groups of assets called?

Answer 16

Current assets,fixed assets & other assets

Question 17

What three accounts are used to calculate a dealerships new vehicle inventory trust position?

Answer 17

New vehicle inventory including demos
Factory holdback receivable
Notes payable-new vehicles

Question 18

True or false: time paid to technicians from open repair orders goes into the work in process inventory account?

Answer 18

True

Question 19

True or false: efficiency times productivity equals proficiency?

Answer 19

True

Question 20

What are the three largest controllable expenses?

Answer 20

Advertising
Personnel
Floor plan interest

Question 21

With a prepaid expense, when is cash and expense recorded?

Answer 21

Cash now and expense later

Question 22

With a accrued expense, when is cash and expense recorded?

Answer 22

Expense now and cash later

Question 23

What does the work in process inventory on the balance sheet represent?

Answer 23

Time purchased from technicians on open R.O.’s

Question 24

When a technicians flat rate pay is costed-out on a repair order and credited from work in process inventory on the balance sheet, what general ledger account is debited?

Answer 24

Cost of labor sales

Question 25

To calculate gross profit as a percent of sales?

Answer 25

Divide the gross profit dollars by the sales dollars

Question 26

Calculate

Answer 26

$400