Finance Basics

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Financial Literacy

This is a financial literacy quiz for aspiring and existing entrepreneurs. This is the kind of information every entrepreneur big or small should be familiar with.

What does appreciation mean?

1. The measure of a continued rise in the worth of an asset.
2. The decrease in value of an asset over time.
3. Current assets.
4. I'm happy you gave me loads of money.

1. The money generated from sale of goods or services is _________________.

2. An amount paid or required in payment for a purchase is __________________.

3. Something valuable that an entity owns is _______________.

4. A debt of a business is _______________.

5. The owner’s share of the assets of a business is _______________.

asset

liability

owner's equity

revenue

expense

The Balance Sheet is an important financial statement that needs to be produced at the end of a fiscal period. It shows the company financial situation in terms of:

1. Funds Available vs Use of Funds
2. Current assets vs. Current liabilities
3. Total fixed assets vs. Total Equity

The Income Statement is crucial for companies because it summarizes over a given
period of time:

1. The company’s revenues and costs
2. The company’s sales and the costs of goods sold
3. The contributions to the company’s profit or loss
4. The company's revenue, expenses and capital

What is capital?

1. Dividends.
2. Paper money.
3. Any assets ready to be used in the production of new assets.
4. The money used to buy the items needed for a business.

What is income?

1. The date on which a loan must be paid back in full.
2. Money received as a result of business activity; a financial gain.
3. Principal of a loan.
4. Money you spend for products & services

What is cash flow?

1. The total amount a business has earned or lost at the end of the month.
2. The money that goes out of your business on a daily basis.
3. The overall movement of funds through your business each month.
4. The amount of money that flows from one account to another.

Costs can be calculated easily by first defining:

1. How you plan on spending funds.
2. Revenue, target audience and capital.
3. Resources, activities and partnerships.
4. All of the above.

What are examples of business expenses?

1. Rent, utilities, legal costs, marketing costs.
2. Bank loans and money owed to investors.
3. Inventory, supplies, office furniture.
4. Milk, break and cigarettes.

Accounts receivable is:

1. The number of clients a sales team gets.
2. Financial spreadsheets showing how much is made by the company.
3. Loans that a company has to pay back.
4. The amount a business is owed by its clients.

How confident would you be if you were solely responsible for your company finances?

110

In your own words, what are direct costs?

In your own words, what are indirect costs?

Economies of scale?

1. Cost advantages that a business enjoys due to a larger scope of operations.
2. Costs that remain the same despite the volume of goods or services produced.
3. Cost advantages that a business enjoys as its output expands.
4. Costs that vary with output. Increases relative to labor and capital.

Economies of scope?

1. Costs that remain the same despite the volume of goods or services produced.
2. Cost advantages that a business enjoys due to a larger scope of operations.
3. Larger companies benefit from lower bulk purchase rates.
4. Costs that vary with output. Increases relative to labor and capital.

Fixed cost?

1. Costs that remain the same despite the volume of goods or services produced.
2. In a large enterprise the same marketing activities or distribution channels may support multiple products.
3. Wages, utilities, materials used in production, etc.
4. Costs that are stuck to the table and are so terribly hard to unstick.

Variable costs?

1. Cost advantages that a business enjoys due to a larger variety of goods sold.
2. Costs that vary with output. Increases relative to labor and capital.
3. Cost advantages that a business enjoys as its costs vary.
4. Costs that remain the same despite the variety of goods sold.

What incurs costs?

1. Creating and delivering value.
2. Maintaining customer relationships.
3. Generating revenue.
4. All of the above.

Will you start your own business when you leave university?

Yes

No

Not sure

How confident are you as an entrepreneur?

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