SPMA 2P27 MIDTERM #1QUESTIONS & ANSWERS

SPMA 2P27 MIDTERM #1QUESTIONS & ANSWERS


What are the 3 key financial statements? - Answer -- Income Statement
- Cash Flow Statement
- Balance Sheet

Do NPOs need to make profits? - Answer -No, NPOs need to make money not profits

What range of time do the 3 financial statements look at? - Answer -- Income
Statement (Period of time)
- Cash Flow Statement (Period of time)
- Balance Sheet (Specific point in time)

Financing is... - Answer -The process of occurring and managing funds to support an
organizations growth and strategic objectives

What are the components of the balance sheet? - Answer -- Assets
- Liabilities
- Shareholders equity

Items in the asset section of the balance sheet are listed in order of... - Answer -
Liquidity

What is liquidity? - Answer -How easy it is to convert assets to cash

What is the fundamental accounting equation? - Answer -Assets = Liabilities + Owner's
Equity

Is debt inherently bad? - Answer -No, Debt can have the potential to raise capital. If an
organization has no debt, why not take some on to make your business better

List these 8 terms in order of liquidity:

- Brand Name
- Investments
- Cash
- Accounts Receivable
- Building
- Finished Racquets
- Raw Materials
- Office Equipment - Answer -1. Cash
2. Investments
3. Accounts Receivable
4. Raw Materials