Basic Business Requirements and Planning
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Questions and Answers

What is the primary purpose of the general journal?

  • To maintain individual customer accounts
  • To serve as the book of final entry (correct)
  • To provide a chronological record of transactions (correct)
  • To summarize all financial activities

Which of the following best describes a subsidiary ledger?

  • The main ledger containing all accounts
  • A record of individual accounts for customers and vendors (correct)
  • A record of only cash transactions
  • A summary of all financial activities

How is an accounts receivable ledger classified?

  • As a control account
  • As a primary journal
  • As a subsidiary ledger (correct)
  • As a general ledger

What does a credit entry in accounting represent?

<p>Value parted with by the business (A)</p> Signup and view all the answers

Which of the following statements about the general ledger is correct?

<p>It groups all accounts found in the chart of accounts. (A)</p> Signup and view all the answers

What is the purpose of the Bureau of Internal Revenue registration?

<p>To register for a Tax Identification Number and manage tax obligations (C)</p> Signup and view all the answers

Which of the following is not included in the basic requirements to start a business?

<p>Business insurance procurement (B)</p> Signup and view all the answers

What does a business plan typically include?

<p>All relevant external and internal elements for starting a venture (A)</p> Signup and view all the answers

Which statement best describes revenue?

<p>Revenue is realized when sales surpass production costs. (C)</p> Signup and view all the answers

What is the primary focus of the staffing process within a business?

<p>Determining the number of workers needed for planned tasks (C)</p> Signup and view all the answers

What is meant by operating profit margin?

<p>The profit after deducting both the cost of goods sold and operating expenses. (D)</p> Signup and view all the answers

Which of the following accurately describes gross profit?

<p>Gross profit provides insight into revenue earned from sales. (C)</p> Signup and view all the answers

What is the primary benefit of registering with SSS, PhilHealth, and Pag-ibig Fund?

<p>To register as an employer and manage employee contributions (B)</p> Signup and view all the answers

What is the primary purpose of the quick ratio?

<p>To evaluate short-term obligations (A)</p> Signup and view all the answers

How is the selling price determined according to the markup formula?

<p>Selling Price = Cost + Mark Up (C)</p> Signup and view all the answers

Which of the following best describes 'freight-in'?

<p>Amount paid to transport purchased goods to the buyer (B)</p> Signup and view all the answers

What does the term 'cost of goods sold' refer to?

<p>Total merchandise or goods sold during a period (A)</p> Signup and view all the answers

Which financial statement measure is primarily aimed at understanding the profitability of a business operation?

<p>Profitability ratios (C)</p> Signup and view all the answers

What role does a bookkeeper perform in a business?

<p>To record and maintain business transaction records (A)</p> Signup and view all the answers

Which of the following is NOT part of the Book of Accounts?

<p>Income Statement (D)</p> Signup and view all the answers

What does 'merchandise inventory, beginning' refer to?

<p>Goods available for sale at the start of the period (D)</p> Signup and view all the answers

Flashcards

Business Plan

A written document that outlines all the internal and external aspects of a new business venture.

Implementation

The process of putting a plan into action to make a concept a reality.

Staffing

Determining the number of employees needed to execute the planned business processes.

Revenue

The money earned from sales surpassing production costs; it's recorded when the sale occurs.

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Sales

Used in merchandising or retail to describe the amount of items sold.

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Profit

The gross income earned after all costs are subtracted.

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Cost

The price of a product, encompassing all associated production expenses.

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Operating Profit Margin

The second level of revenue in the income statement, deducting the cost of production and operating expenses

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General Journal

A primary journal that records every financial transaction in chronological order. It includes columns for date, account titles, explanations, references, and debit and credit amounts.

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General Ledger

A collection of all accounts in a company, organized by account type. It summarizes financial activities recorded in the General Journal and subsidiary ledgers.

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Subsidiary Ledger

Detailed records for individual customers or vendors, used when a business is not using cash for transactions.

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Debit

The left-hand side entry in a double-entry accounting system. It represents an increase in assets or a decrease in liabilities or equity.

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Quick Ratio

Measures a company's ability to pay short-term obligations using its most liquid assets. It excludes inventory from current assets.

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Service Income

Revenue earned from providing services to customers.

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Mark Up

The amount added to the cost of a product to determine its selling price.

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Projected Monthly Revenue

The estimated total income a business expects to generate in one month.

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Cost of Goods Sold (COGS)

The total cost of producing or acquiring the goods sold during a specific period.

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Merchandise Inventory, Beginning

The value of goods available for sale at the start of an accounting period.

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Purchases

The cost of acquiring new goods or merchandise for resale during a period.

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Freight-in

The transportation costs incurred for bringing purchased goods to the buyer's location.

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Study Notes

Basic Business Requirements

  • Securities and Exchange Commission (SEC) Registration: Required for partnerships or corporations.
  • Department of Trade and Industry (DTI) Registration: Needed for business tradenames.
  • Mayor's Business Permit: For operating in a specific city or municipality, covering local business taxes.
  • Bureau of Internal Revenue (BIR) Registration: To get a Tax Identification Number (TIN), official receipts, invoices, and register books of accounts. Also involves paying national taxes.
  • SSS, PhilHealth, and Pag-ibig Fund registration: Required for employers and employees, including contributions.

Business Plan

  • A document outlining all internal and external elements of a new venture, prepared by the entrepreneur.

Implementation Process

  • Executing a plan/policy to make a concept a reality.
  • Ensuring business operations positively impact productivity and efficiency.

Staffing

  • Determining the number of people needed for the planned work processes.

Revenue

  • Result of exceeding production costs when selling goods or services.
  • Revenue is recognized when earned (cash or on account).

Sales

  • Used in merchandising, describing the gross income from sales.

Profit

  • Gross income from sales, giving insight into revenue.

Cost

  • The total outlay required in producing a product (purchase price + other costs).

Operating Profit Margin

  • Level 2 revenue calculation.
  • Deducts cost of goods sold + operating expenses.

Income Statement

  • Level 3 revenue calculation (net profit margin).
  • Considers short-term obligations, liquid assets (excluding inventories), and business deductions like interest expenses and income tax.

Quick Ratio

  • Measures a company's short-term ability to meet short-term obligations (liquidity ratio). It does not consider inventory in current assets.

Service Income

  • Recording revenue earned from service-based businesses.

Mark-up

  • The amount added to the cost to determine the selling price. Selling Price = Cost + Mark-up

Projected Monthly/Yearly Revenue:

  • Projected daily revenue multiplied by 30 or 365 days.
  • Represents the amount of goods and merchandise sold.

Cost of Goods Sold (COGS):

  • Amount of goods and merchandise sold during a specific period.

Merchandise Inventory:

  • Beginning inventory = goods on hand at the start of a period.
  • Ending inventory = goods on hand at the end of a period.
  • Purchases = goods purchased from suppliers during the period.

Freight-in:

  • Expenses of transporting goods to the business.

Profitability Ratios

  • Used to evaluate the profitability of a business.

Bookkeeping

  • The process of recording business transactions systematically and chronologically.

Bookkeeper

  • The person in charge of recording, maintaining, and updating business financial records.

Book of Accounts

  • Journal: The book of original entry (basic records of transactions).
  • Ledger: The book of final entry, containing summaries of transactions from the journal.

General Journal

  • Basic journal, including columns for dates, descriptions, accounts affected, debits and credits.

General Ledger

  • Summary of all accounts in the business.

Subsidiary Ledger

  • Detailed records for specific accounts (e.g., accounts receivable, accounts payable).

Accounts Receivable Ledger

  • Records credit sales to customers.

Accounts Payable Ledger

  • Records invoices received from suppliers.

Debit

  • Left-hand side of an account.

Credit

  • Right-hand side of an account.

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Description

This quiz covers essential business requirements such as registrations needed for corporations and partnerships, including SEC and DTI. It also focuses on aspects of business planning and staffing necessary for successful implementation and operation of a new venture.

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