Law and Business 5

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Author:
pablojr
ID:
31502
Filename:
Law and Business 5
Updated:
2010-08-27 17:55:13
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Business Practices
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Description:
State Examination
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  1. John Carson is a newly licensed contractor and he needs some start-up capital in order to begin business. Which of the following is the best way fro him to get the capital that he needs?
    OBTAIN A CONVENTIONAL LOAD FROM HIS BANK AND MAKE MONTHLY PAYMENTS
  2. Aside from requiring a certain amount of start-up capital, new contractors need to establish credit with suppliers. What is the most common source of start-up capital for a small contracting business?
    EQUITY FUNDS
  3. A banker is reviewing your application for a short-term business loan. Select the statement which indicates what is most important to the bank?
    A CURRENT RATIO AND/OR QUICK RATIO
  4. A contractor wants to establish a line of credit with a local bank. What will the banker need to determine if the contractor is eligible for a line of credit?
    • ALL OF THE ABOVE
    • (A. BALANCE SHEETS FOR CURRENT AND PRIOR YEARS
    • B. INCOME STATEMENTS FOR CURRENT AND PRIOR
    • C. INFORMATION ON ANY UNCOMPLETED CONTRACTS)
  5. For which expense is it least appropriate for a contractor to seek a short-term loan?
    MONTHLY RENT ON OFFICE SPACE
  6. In order to get a loan from a bank to buy supplies for which you can pay back within 90 days, acceptance of your loan will depend on:
    • ALL OF THE ABOVE
    • (A. THE FACT THAT YOU HAVE A SHORT TERM LIQUIDITY
    • B. A HIGH QUICK RATIO
    • C. YOUR ABILITY TO PAY THE LOAN BACK WITHIN 90 DAYS)
  7. If Bill, a contractor, decides to take out a loan to pay for a truck, he should obtain a(n):
    INTERMEDIATE TERM LOAN TO BE PAID IN 1-7 YEARS
  8. Which of the following statements concerning accounting systems is correct?
    THE ACCRUAL METHOD RECOGNIZES CASH RECEIVED BUT NOT EARNED, AS A LIABILITY AND NOT AS INCOME
  9. Which is the best method of bookkeeping in a construction company?
    RECORD YOUR EXPENSES WHEN THEY OCCUR AND NOT WHEN THEY ARE PAID AS WELL AS RECORD YOUR INCOME WHEN YOU HAVE EARNED IT
  10. Francis is starting a new business. Which of these would be the best decision?
    HIRE A PROFESSIONAL BOOKKEEPER TO KEEP THE BOOKS
  11. In bookkeeping, lets say a discrepancy emerges between debits and credits of approximately $9.32. What should the bookkeeper do?
    FIND THE ERROR, NO MATTER HOW LONG IT TAKES
  12. Bill, a new contractor, just purchased a new truck. If Bill pays cash for the truck, how will this transaction be recorded?
    DEBIT TRUCKS, THEN CREDIT CASH
  13. At the end of each month, data is posted from the bookkeeping journals to the:
    GENERAL LEDGER
  14. A contractor should incorporate his chart of accounts into his:
    JOURNALS & LEDGERS
  15. Contractors deal with numerous forms, files, and reports. What is the minimum length of time that a contractor shall keep a building report in his/her files?
    5 YEARS
  16. Which of the following represents a current asset?
    RETENTIONS
  17. Which of the following is a tangible asset?
    MATERIALS
  18. What is a fixed asset?
    ASSETS WHICH WILL NOT BE SOLD FOR A LEAST ONE YEAR
  19. Which is true about liabilities?
    • ALL OF THE ABOVE
    • (A. CAN BE EITHER CURRENT OR LONG-TERM
    • B. ARE OBLIGATIONS TO PAY MONEY OR RENDER SERVICES
    • C. CAN CONSIST OF ACCOUNTS PAYABLE, PAYROLL, AND MORTGAGE)
  20. On a balance sheet, why is the net worth important?
    IT REPRESENTS THE AMOUNT OF MONEY THE OWNER HAS INVESTED N THE COMPANY AS WELL AS THE PROFITS THE COMPANY HAS RETAINED. IT TELLS HOW MUCH OF THE COMPANY'S ASSETS BELONG TO THE OWNER.
  21. the term "net worth" on a corporate balance sheet represents the:
    THE CLAIM OF THE OWNER ON THE ASSETS OF THE BUSINESS
  22. On a balance sheet, a figure is entered by mistake on the asset side instead of the liability side. Which of the following results?
    THE ERROR WILL BE TWICE AS LARGE
  23. An error on a balance sheet is found to be divisible by 9. What is the probable cause of this error?
    TRANSPOSING FIGURES
  24. What is the best way to tell if your company is profitable or not?
    LOOK AT THE INCOME STATEMENT
  25. An income an expense statement can be also called a:
    • ALL OF THE ABOVE
    • (A. PROFIT AND LOSS STATEMENT
    • B. INCOME STATEMENT
    • C. P & L STATEMENT)
  26. How often should income statements be prepared?
    WHENEVER YOU WANT TO REVIEW YOUR PROFIT OR LOSS
  27. Directs costs

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