A shoe company has developed a new style of athletic shoe. The fixed costs are $28,000, the variable cost per unit is $27, and the factory can make 1,500 units. The company hopes to make $25,000 in profit. Using the formula provided, what is the cost per unit if all units are sold?

Number of Units Sold x Price of Product = (Number of Units Sold x Variable Cost per Unit) + Fixed Costs + Profit

	$51.79
	$62.33
	$74.89
	$85.11

2.

If there are no investors, do businesses still need to use GAAP?

	Yes, all businesses should use GAAP.
	Yes, every professional accountant uses GAAP.
	No, only investors need the reports that GAAP create.
	No, GAAP are only required for publicly traded companies.

3.

Hamid is just out of college and has started a new job. Retirement is part of the benefits package. His employer will match the amount he contributes up to $1,000 a month. How much should he contribute?

	It depends if it is a 401K or a traditional IRA.
	Not much since he will not be retiring for a long time.
	As much as he can afford since it will double his money.
	The amount he would put in a savings account since it's basically the same thing.

4.

Ximena created the marketing budget for the third quarter. Her company had budgeted $40,000 for advertising. When she was reviewing the expenses for the quarter, she discovered that the actual expenses were $53,000. She has reviewed the budgets for the last three years' third quarter and discovered that this is not a common issue. What category of budget is she most likely working with?

	cash budget
	start-up budget
	operating budget
	sales forecast budget

5.

Trevon is opening a cookie bakery in his small town. He is saving the funds that he needs to open his business and is considering crowdsourcing the last $10,000. He has already saved $60,000 to buy the needed equipment and get through a few slow months. A friend suggests that he find a venture capitalist. Is this a good suggestion?

	No, venture capitalists are only for tech businesses.
	No, venture capitalists tend to invest in higher risk businesses.
	Yes, they will likely want to invest much more than the $10,000 he needs.
	Yes, this is exactly the kind of innovated business venture capitalists prefer.

6.

Jennifer's business has been open for two years. She is hoping that her new marketing plan will increase sales because she would really like to hire an assistant. If sales are up for six months in a row, she will be comfortable bringing on another employee. Which principle of financial planning does this illustrate?

	pay debts
	return for investors
	finance future growth
	accurately document finances

7.

If a business can make a product and break even, should it move forward with that product?

	No, the business also needs to make a profit.
	Yes, if the product breaks even, the business is profitable.
	No, the break-even point is only important for new products.
	Yes, as long as the business does not lose money it is a good idea.

8.

A shoe company has developed a new style of athletic shoe. The fixed costs are $28,000, the variable cost per unit is $27 and the factory can make 1,500 units. The company hopes to make $25,000 in profit. Using the formula provided, how many pairs of shoes does the company have to sell to break even?

Number of Units Sold x Price of Product = (Number of Units Sold x Variable Cost per Unit) + Fixed Costs + Profit

	995
	1001
	1099
	1185

9.

Which is disadvantage of accrual accounting?

	GAAP requires using accrual with double entry accounting.
	Accrual accounting is used predominately in service businesses.
	Inventory cannot be effectively tracked with accrual accounting.
	The business may appear to have more cash than it actually does.

10.

An exclusive fashion line has made 1,000 purses. They have calculated the cost per purse needs to be $135 for it to make a profit of $40,500, which is the goal. The break-even point is selling 700 purses. Using the formula provided, how could you determine the total of the variable and fixed costs for the purses?

Number of Units Sold x Price of Product = (Number of Unit Sold x Variable Cost per Unit) + Fixed Costs + Profit

	There is not enough information to determine these costs.
	Figure out the percentage of the overall sales that is the profit.
	Figure out the total when all purses are sold and subtract profit.
	Figure out the profit per purse and assume the rest is variable costs.

11.

Sole proprietors do not need to worry about accounting.

	True
	False

12.

Ricardo is an accountant at a thriving business. His boss lets him know that the company is going to have an independent auditor review their books. What would be the most likely purpose for this?

	The company has paid inadequate taxes to the IRS.
	The company is restructuring Ricardo's department.
	The company is planning on changing its accounting methods.
	The company wants an independent review of their bookkeeping.

13.

Rita is looking for a financial advisor because she would like her business to have investment revenue. A friend recommends highly recommends an advisor in her area. Rita goes online and discovers that this financial advisor has been in business for 10 years and has one complaint from a client stating that the final payment from when that client closed an account took too long. What should Rita do next?

	Tell her friend that the advisor is likely a criminal.
	Find a new advisor immediately since this one has problems.
	It is only one client, so she should ignore the negative incident.
	Still consider the advisor but ask for more information before making a decision.

14.

Ximena created the marketing budget for the quarter. Her company had budgeted $40,000 for advertising. When she was reviewing the expenses for the quarter, she discovered that the actual expenses were $53,000. What information will be most helpful as she begins to plan the next quarter's budget?

	what next year's operating budget will be
	how much the company spent on advertising in the past five years
	why advertising costs were so high and if those expenses will continue
	how other companies of comparable size determine their marketing budget

15.

Based on the quarterly report, what is the largest expense this business has?

Downtown Bike Shop
Revenues
Merchandise Sales	$26,800
Professional Coaching Services	$3,500
Total Revenue	$28,300
Expenses
Inventory	$12,270
Wage expenses	$3,500
Rent Expense	$750
Interest	$100
Loan Payment	$1000
Total Expenses	$17,620
Net Income	$10,680

	Wages
	Interest
	Inventory
	Merchandise sales