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FIN 292 (EBD302)

FIN 292 (EBD302). Midterm Exam [Homework] Study Guide. Chapter 1: startup requirements. The Business Plan is widely considered to have two uses: [Discuss] An organizational plan for the potential entrepreneurs An information document for potential investors

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FIN 292 (EBD302)

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  1. FIN 292 (EBD302) Midterm Exam [Homework] Study Guide

  2. Chapter 1: startup requirements • The Business Plan is widely considered to have two uses: [Discuss] • An organizational plan for the potential entrepreneurs • An information document for potential investors • Every new business has 2 important hurdles. What are they? • How does the sole proprietorship differ from a limited liability company in terms of personal liability? • What are 3 sources of startup capital? What are the pros and cons of each? • What is a pro forma financial statement? Why do we prepare them?

  3. Chapter 2: basics of record keeping • Why should business owners keep accurate records? • How do we define bookkeeping? How does it differ from accounting? • How does the general journal differ from a specialized lecture? • What is the Chart of Accounts? • Why is double entry accounting more accurate than the single entry method? • How does Cash Basis Accounting differ from Accrual Basis Accounting?

  4. Chapter 3: Integrating Accounting, Finance, Marketing and Economics • Why are the concepts of supply and demand important to the business owner? • Why is right-sizing an important concept? • How do businesses differ in their production functions? • What does it mean to be capital intensive business? • What does the Statement of Cash Flows tell us about the business? • Why are economic profits important?

  5. Chapter 4: Breakeven Point Analysis and Operating Leverage • Why is it important for the owner(s) to know their breakeven point in sales? • How do we the breakeven point in sales? • What is contribution margin and why is it important? • What is operating leverage? • How is the degree of operating leverage affected by the business’s production function? • How does the degree of operating leverage affect breakeven point?

  6. Chapter 5: Working Capital Management • How does a financial manager define working capital? How does it differ from the Accountants definition? • What are capital management objectives with respect to Cash, Accounts Receivable, and Inventory? • What do we mean by Liquidity when referring to working capital? • What is the Cash Conversion Cycle and why is it important business owner? • What does the current ratio tell us about the level of liquidity for a business?

  7. Chapter 6: Cash Management • What are the 2 basic rules for cash management? • What are some of the techniques a business will use to speedup payments from customers that are geographically distant? • Why should business owners prepare cash budgets? • What is meant by the following terms? • Inventory Conversion Period • Receivables Collection Period • Payables Deferral Period

  8. Midterm • 5 Essay Questions • 5 Accounting Entries: Debit - Credit • Revenues • Expenses • Current Assets, Current Liabilities

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