Belongs to Principle of Hospitality Finance

Chapter 4: The Balance Sheet

1. A lien is the legal right to hold anothers property to satisfy a debt.
   1. Interest
   2. A liability
   3. A loan
   4. A lien
2. Which of the following are lenders looking for when reading a balance sheet?
   1. The financial strength of the business
   2. The amount of the businesss expenses
   3. The businesss potential return on investment
   4. The amount of revenue generated
3. Which of the following is a limitation of the balance sheet?
   1. It does not include information about the amount of money owed by the business
   2. It does not include information about the amount of money due to the business
   3. It does not include the relative value of the employees of the business
   4. It does not include information about the stock issued by the business
4. Which of the following best describes the account format of preparing a balance sheet?
   1. Liabilities and owners equity accounts are listed first and then the assets are listed (vertically)
   2. Assets are listed first and then the liabilities and owners equity accounts are listed (vertically)
   3. Assets of a company are listed on the right side of the report and the liabilities and owners equity accounts are listed on the left side
   4. Assets of a company are listed on the left side of the report and the liabilities and owners equity accounts are listed on the right side
5. According to Dr. Dopsons Stuff Theory, which of the following is not a way you would acquire your stuff?

1. Borrowing money to buy your car
2. Stealing money from your mothers purse
3. Getting a TV from your parents as a gift
4. Buying groceries with money from your paycheck

6. Which of the following is not a component of the balance sheet?

1. Revenues
2. Liabilities
3. Owners Equity
4. Assets

7. Which of the following is the correct order of liquidity of current assets?
   1. Cash, marketable securities, accounts receivable, inventories, prepaid expenses
   2. Cash, accounts receivable, marketable securities, inventories, prepaid expenses
   3. Cash, accounts receivable, inventories, prepaid expenses, marketable securities
   4. Cash, marketable securities, inventories, prepaid expenses, accounts receivable
8. Which of the following are included in the long-term liabilities of a business?
   1. Income taxes that are due this year
   2. Payments due this year on a mortgage
   3. Payments due over the full term of a mortgage
   4. Accrued wages due to employees
9. Which of the following is not included in the owners equity of a business?
   1. Common stock
   2. Additional paid-in capital
   3. Retained earnings
   4. Property and equipment
10. Given an accounts receivable balance on the balance sheet of $250,500 and a balance from the previous year of $275,000 for this account, what is the dollar variance?
    1. $ 24,500
    2. ($226,000)
    3. ($ 24,500)
    4. $226,000
11. Given an accounts payable balance on the balance sheet of $189,025 and a balance from the previous year of $166,400 for this account, what is the percentage variance?
    1. 88.03%
    2. (11.97%)
    3. 5.98%
    4. 13.60%
12. When calculating percentage variance for an account on the balance sheet, the denominator is
    1. The prior periods number
    2. The dollar difference between identical categories on two balance sheets
    3. The next periods number
    4. The current periods number