Study Guide Financial Management Part 1 True or False Directions Place a 7 for True or an F for False in the Answers column to show whether each of the following statements is true or false. Answers 1. Most start-up businesses can be opened with a minimum of expenditures. 2. Financial records provide detailed information about the financial activities of a company 2. 3. Owners' equity is the value of the business after liabilities are subtracted from assets. 4. An income statement usually covers a five-year period. 5. The income that a business receives over a period of time is called profits. 6. When expenses are greater than income, a net loss occurs. 6 7. Financial performance ratios compare a company's financial elements to its competitors. 8. With direct deposit, net pay is transferred electronically into the employee's bank account. Part 2 Identifying Financial Records Directions In the Answers column, write the letter that represents the word, or Answers group of words, that correctly identifies each type of financial record. 9 9. The type and number of products on hand for sale A. asset records 10. 10. Credit purchases made by customers B. depreciation records 11. 11. The amount assets have decreased in value due to age or use C. inventory records 12. 12. Information on employees, their compensation, and benefits D. accounts receivable 13. 13. The buildings and equipment owned by the business E. accounts payable 14. 14. All taxes collected, owed, and paid F. cash records 15. G. payroll records 15. Companies from which credit purchases were made records