Test 1

Question 1

money owed by a company to a supplier. Ex. I purchase $10,000 of beauty supplies from a distributer to put in my store. The distributor gives me 60 days to pay it back. The $10,000 is now in accounts payable for my company meaning that I owe it to someone.

Answer 1

Accounts Payable

Question 2

Money owed by a customer to a company. Ex. You purchased a new computer from me for $1,000. You put down $200 and signed a contract agreeing to pay the remaining $800 within the next 30 days. That $800 goes into accounts receivable in my company meaning someone owes my company $800.

Answer 2

Accounts Receivable

Question 3

Individuals that make small investments in an enterprise or to support an entrepreneur where they do not expect an immediate or large return on the investments. They are typically friends and family who know the business owner and want to see them succeed.

Answer 3

Angel Investors

Question 4

Something of value. Anything owned. Ex. A house, a diamond ring. A security is a financial asset- a piece of paper that represents ownership in a something and is worth money.

Answer 4

Assets

Question 5

debt from a bank. Banks require much more information from potential borrowers, and take more time to make a lending decision based on a great deal of analysis. Therefore, bank loans are less expensive than online lines of credit.

Answer 5

Bank Loan

Question 6

a loan. A bond is security that investors buy and sell, that represents a legal obligation from the company issuing the bond that they will repay the funds they received when they issued the bond.

Answer 6

Bond

Question 7

A determination of how many units are needed to sell in order to pay for all fixed costs.

Answer 7

Breakeven Analysis

Question 8

A company that provides individuals and companies with access to financial markets. Ex. You buy stocks and bonds from a broker.

Answer 8

Brokerage

Question 9

Proper business behavior beyond complying with legal requirements.

Answer 9

Business Ethics

Question 10

Funds contributed by investors to a business. Investors contribute capital to a business they expect a significant return on their investment when the business succeeds.

Answer 10

Capital (or Equity)

Question 11

Expenditures on equipment the business will use for many years.

Answer 11

Capital Expenditures

Question 12

Total Revenues minus Total cost minus one-time expenditures (called “capital expenditures”) on equipment that will be used for many years.

Answer 12

Cash Flow

Question 13

Cash, publicly traded stocks, government bonds, or corporate bonds that can be quickly turned into cash. Cash instruments can be turned into cash at values that are predictable and available to all holders of the cash instrument. Ex. Apple stock is a cash instrument because it can be sold and converted to cash immediately and the amount that anyone would get for that stock would be the same.

Answer 13

Cash Instruments

Question 14

Equipment, inventory or other goods that are pledged to the bank in the case the company cannot make a loan payment.

Answer 14

Collateral

Question 15

The ability to interact in a friendly and effective way with unfamiliar people. The ability to seem welcoming and easy to talk to, even with people who are different in age, appearance, or background.

Answer 15

Comfort Engaging with Strangers

Question 16

money earned when something is sold.

Answer 16

Commission

Question 17

a promise to keep information you learn secret. This promise is often formalized by signing a Non-Disclosure Agreement (or DNA).

Answer 17

Confidentiality

Question 18

A situation in which an individual might take an action to his/her advantage that would be to the disadvantage of a person or company that believes this individual is serving them. Ex. A customer tells a supplier

Answer 18

Conflict of Interest

Question 19

unit price minus cost of goods sold.

Answer 19

Contribution Margin

Question 20

actions entrepreneurs and companies take that go beyond their financial self-interest. Ex. a local pet store makes a large donation to an animal shelter.

Answer 20

Corporate Social Responsibility

Question 21

a person in the eyes of the law. Taxed for profits and is liable for any debts or judgements. owned by shareholders (individuals or other corporations).

Answer 21

Corporation

Question 22

Costs that make up one unit of what you sell. These can be labor costs as well as material costs. Ex. When you sell a hat, the variable cost includes: the hat’s material and the labor cost required to make the hat.

Answer 22

Cost of Goods Sold

Question 23

A loss that an insurance company will reimburse a policyholder for in the event of a claim.

Answer 23

Covered Loss

Question 24

Funds lent to a business with an agreement that the business will repay the lender with the interest.

Answer 24

Credit(or Debt)

Question 25

A person or a business with a strong credit score and the financial resources that make it likely they will be able to repay any loan.

Answer 25

Credit Worthiness