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John Carson is a newly licensed contractor and he needs some start-up capital in order to begin business. Which of the following is the best way fro him to get the capital that he needs?
OBTAIN A CONVENTIONAL LOAD FROM HIS BANK AND MAKE MONTHLY PAYMENTS
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Aside from requiring a certain amount of start-up capital, new contractors need to establish credit with suppliers. What is the most common source of start-up capital for a small contracting business?
EQUITY FUNDS
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A banker is reviewing your application for a short-term business loan. Select the statement which indicates what is most important to the bank?
A CURRENT RATIO AND/OR QUICK RATIO
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A contractor wants to establish a line of credit with a local bank. What will the banker need to determine if the contractor is eligible for a line of credit?
- ALL OF THE ABOVE (A. BALANCE SHEETS FOR CURRENT AND PRIOR YEARS
- B. INCOME STATEMENTS FOR CURRENT AND PRIOR
- C. INFORMATION ON ANY UNCOMPLETED CONTRACTS)
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For which expense is it least appropriate for a contractor to seek a short-term loan?
MONTHLY RENT ON OFFICE SPACE
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In order to get a loan from a bank to buy supplies for which you can pay back within 90 days, acceptance of your loan will depend on:
- ALL OF THE ABOVE (A. THE FACT THAT YOU HAVE A SHORT TERM LIQUIDITY
- B. A HIGH QUICK RATIO
- C. YOUR ABILITY TO PAY THE LOAN BACK WITHIN 90 DAYS)
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If Bill, a contractor, decides to take out a loan to pay for a truck, he should obtain a(n):
INTERMEDIATE TERM LOAN TO BE PAID IN 1-7 YEARS
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Which of the following statements concerning accounting systems is correct?
THE ACCRUAL METHOD RECOGNIZES CASH RECEIVED BUT NOT EARNED, AS A LIABILITY AND NOT AS INCOME
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Which is the best method of bookkeeping in a construction company?
RECORD YOUR EXPENSES WHEN THEY OCCUR AND NOT WHEN THEY ARE PAID AS WELL AS RECORD YOUR INCOME WHEN YOU HAVE EARNED IT
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Francis is starting a new business. Which of these would be the best decision?
HIRE A PROFESSIONAL BOOKKEEPER TO KEEP THE BOOKS
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In bookkeeping, lets say a discrepancy emerges between debits and credits of approximately $9.32. What should the bookkeeper do?
FIND THE ERROR, NO MATTER HOW LONG IT TAKES
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Bill, a new contractor, just purchased a new truck. If Bill pays cash for the truck, how will this transaction be recorded?
DEBIT TRUCKS, THEN CREDIT CASH
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At the end of each month, data is posted from the bookkeeping journals to the:
GENERAL LEDGER
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A contractor should incorporate his chart of accounts into his:
JOURNALS & LEDGERS
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Contractors deal with numerous forms, files, and reports. What is the minimum length of time that a contractor shall keep a building report in his/her files?
5 YEARS
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Which of the following represents a current asset?
RETENTIONS
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Which of the following is a tangible asset?
MATERIALS
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What is a fixed asset?
ASSETS WHICH WILL NOT BE SOLD FOR A LEAST ONE YEAR
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Which is true about liabilities?
- ALL OF THE ABOVE(A. CAN BE EITHER CURRENT OR LONG-TERM
- B. ARE OBLIGATIONS TO PAY MONEY OR RENDER SERVICES
- C. CAN CONSIST OF ACCOUNTS PAYABLE, PAYROLL, AND MORTGAGE)
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On a balance sheet, why is the net worth important?
IT REPRESENTS THE AMOUNT OF MONEY THE OWNER HAS INVESTED N THE COMPANY AS WELL AS THE PROFITS THE COMPANY HAS RETAINED. IT TELLS HOW MUCH OF THE COMPANY'S ASSETS BELONG TO THE OWNER.
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the term "net worth" on a corporate balance sheet represents the:
THE CLAIM OF THE OWNER ON THE ASSETS OF THE BUSINESS
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On a balance sheet, a figure is entered by mistake on the asset side instead of the liability side. Which of the following results?
THE ERROR WILL BE TWICE AS LARGE
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An error on a balance sheet is found to be divisible by 9. What is the probable cause of this error?
TRANSPOSING FIGURES
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What is the best way to tell if your company is profitable or not?
LOOK AT THE INCOME STATEMENT
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An income an expense statement can be also called a:
- ALL OF THE ABOVE(A. PROFIT AND LOSS STATEMENT
- B. INCOME STATEMENT
- C. P & L STATEMENT)
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How often should income statements be prepared?
WHENEVER YOU WANT TO REVIEW YOUR PROFIT OR LOSS
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