Financing and Budgeting
1. Which one of the following categories makes up the largest percentage of a child care operating budget?
A. Supplies
B. Salaries and benefits
C. Food
D. Mortgage or rent
2. Child care operating budgets generally contain a pro forma income statement. To prepare this statement, you must first prepare budgets for _______ and _______.
A. estimated income; actual income
B. estimated expenditures; actual expenditures
C. revenues; expenses
D. income; reserves
3. Registration fees usually range from _______ to _______.
A. $15; $50
B. $25; $75
C. $45; $90
D. $50; $100
4. A full-charge bookkeeper
A. is a CPA.
B. is a tax expert.
C. can prepare financial statements.
D. must have child care experience.
5. An aging of accounts receivable performed on April 20 reveals that one of your customers has owed you $325 since January 15. Which of the following alternatives should you pursue?
A. Offer additional credit to your clients.
B. Turn the account over to a collection agency.
C. Telephone the customer on a daily basis.
D. Send the customer threatening letters.
6. Which one of these categories would most likely be found in the operating budget of a day care center?
A. Tables and chairs for classrooms
B. Desks and chairs for the office
C. Deposits for utility services
D. Loan payments
7. If an employer fails to pay state unemployment taxes on a timely basis, the rate on FUTA taxes will
A. remain the same.
B. be lower.
C. increase by 100 percent.
D. increase.
8. Consider these three factors: amount reasonable for type of child care program used, amount necessary to meet financial commitment, and amount charged for other local programs. These factors are used to determine
A. consultant fees.
B. the startup budget.
C. accounts payable.
D. the tuition rate.
9. Which of the following financial statements includes the assets, liabilities, and equity accounts of a business?
A. Income statement
B. Balance sheet
C. Operating budget
D. Form W-4
10. This financial ratio measures the business's liquidity:
A. days receivable ratio.
B. average daily rate ratio.
C. current ratio
D. profit margin.
11. The Average Daily Rate ratio, often used by outsiders as an evaluation of how much revenue is earned each day, is usually calculated on the basis of how many days?
A. 360 days
B. Number of days a child care facility is open
C. 365 days
D. 30 days
12. In the child care business, the term accounts receivable will probably consist of
A. government grants.
B. equipment costs.
C. the system of accounting used by the business.
D. registration and tuition fees.
13. The Income Statement for Tiny Tykes Day Care reveals total revenues of $181,575 and total expenses of $159,657. The profit margin for Tiny Tykes is
A. 87.9%.
B. 12.1%.
C. 1.2.
D. impossible to determine from the information given.
Questions 14 and 15 are based on Exam Figure A. Fill in the missing lines in the balance column of this figure. Then answer Questions 14 and 15.
EXAM FIGURE A—An Individual Customer's Account Receivable
14. What was the family's balance after paying you on Jan. 16, 20XX?
A. $0
B. $240
C. $60
D. $420
15. What is the family's current (most recent) balance?
A. $330
B. $210
C. $570
D. $0
16. The Balance Sheet for ABC Day Care has Total Assets of $195,400, Total Liabilities of $129,500, and Total Owner's Equity of $57,300. What can we say about ABC Day Care?
A. It's a very successful business.
B. It has too much debt.
C. Someone made a mistake doing its Balance Sheet.
D. Someone stole $8,600 from ABC.
Use the following table to fill in the Income Statement in Exam Figure B. Then answer Question 17 below.
17. After completing the form in Exam Figure B, you find that there is _______ for the period from September 1 through September 30.
A. a profit of $95.30
B. a loss of $95.30
C. a loss of $4.70
D. no profit or loss
EXAM FIGURE B—Use this figure to answer Question 17.
18. You, the owner of XYZ Day Care, buy a new van for your business. The van costs $20,000, all of which you borrow from First American Bank. Which of the following correctly describes the journal entry for this transaction?
A. $20,000 debit to Vehicles, $20,000 credit to Owner's Equity
B. $10,000 debit to Vehicles, $10,000 credit to Notes Payable
C. $20,000 debit to Vehicles, $20,000 credit to Notes Payable
D. $20,000 debit to Vehicles, $20,000 credit to Accounts Payable
19. A double-entry system of bookkeeping is one in which
A. two separate sets of record books are kept.
B. each transaction consists of just one credit and just one debit.
C. two different people make the entries in the journal as a check on correctness.
D. the credit portion of a transaction must always equal the debit portion.
20. Which of the following taxes must be paid only by the employer?
A. Federal income
B. State
C. Federal unemployment
D. FICA
You forgot to post your answers.
I was just over looking them
1.d
2.c
3.a
4.c
5.c
6.c
7.d
8.c
9.b
10.c
11.c
12.b
13.d
14.d
15.c
16.d
17.b
18.d
19.a
20.b
Theres alot i wasn't sure about so if oyu could please help that be great thank you
I urge you to go back and really study your course materials.
I believe you're right for 2, 3, 4, 9, 10, 11.
It looks as though the following are wrong: 2, 5, 6, 7, 8, 12, 13, 19, 20
I don't know about 3, 14, 15, 16, 17, 18
answer 13 is not d
the answer is (b)
actually i just took it and got a 60. 14 c 15 b and colleen is right will post the correct answers as i get them but 1, 5, 8, 12, 16, 17, 19, 20 are wrong. i have to wait until tommorow to retake.
the correct answers are 1 b, 2 c, 3a, 4c, 5b, 6c, 7d, 8d, 9b, 10c, 11c, 12d, 13b, 14c, 15b, 16c, 17a, 18d, 19d, 20c
thanks meghan that really helped do u have a email to where i can email if i need help.
I don't understand what Profit Margin is. How is the answer to 13 B? When the information provided, that the answer should be D.
1. To determine which category makes up the largest percentage of a child care operating budget, you would need to analyze the budget data for each category and calculate the percentage of the total budget that each category represents. By comparing the percentages, you can identify the category with the largest percentage.
2. To prepare a pro forma income statement for a child care operating budget, you would first need to prepare budgets for estimated income and estimated expenditures. These budgets provide the projected income and expenses for a specific period, allowing you to calculate the net income or loss for that period.
3. Registration fees for a child care program can vary, but they usually range from a minimum amount to a maximum amount. To determine the specific range, you would need to gather information about the typical registration fees charged by child care programs in your area.
4. A full-charge bookkeeper is responsible for various financial tasks, including preparing financial statements. While they may not necessarily be a Certified Public Accountant (CPA) or a tax expert, they should have knowledge and experience in bookkeeping, accounting, and financial management.
5. When an aging of accounts receivable reveals that a customer has owed you money for a significant period of time, you have several alternatives to pursue. These can include offering additional credit, turning the account over to a collection agency, contacting the customer on a regular basis, or sending formal collection letters. The most appropriate alternative would depend on factors such as the customer's payment history and your business's collection policy.
6. The operating budget of a day care center typically includes categories related to the day-to-day operations of the center. This can include expenses for supplies, salaries and benefits for staff, food, utilities, and other operational costs.
7. If an employer fails to pay state unemployment taxes on a timely basis, the rate on Federal Unemployment Tax Act (FUTA) taxes can increase. This means that the employer may have to pay higher FUTA taxes as a penalty for the late payment of state unemployment taxes.
8. When determining the tuition rate for a child care program, various factors need to be considered. These factors may include the amount reasonable for the type of program, the amount necessary to meet the program's financial commitments, and the amount charged by other local child care programs. By considering these factors, you can set a tuition rate that is competitive and sustainable for your program.
9. The financial statement that includes the assets, liabilities, and equity accounts of a business is called a balance sheet. The balance sheet provides a snapshot of the business's financial position at a specific point in time.
10. The current ratio is a financial ratio that measures a business's liquidity by comparing its current assets to its current liabilities. It is calculated by dividing current assets by current liabilities.
11. The Average Daily Rate ratio, often used as an evaluation of revenue earned each day, is typically calculated based on the number of days the child care facility is open. This may vary depending on whether the facility operates year-round or has specific holidays or breaks.
12. In the child care business, accounts receivable typically consists of the amounts owed by customers for services provided. This can include registration fees, tuition fees, and any outstanding balances.
13. To calculate the profit margin for a child care business, you would divide the net income (revenues minus expenses) by the total revenues. In this case, the profit margin cannot be determined without knowing the net income.
14. To determine the family's balance after paying on a specific date, you would need to subtract the payment amount from the previous balance. The resulting amount would be the new balance.
15. To determine the family's current (most recent) balance, you would need to refer to the most recent entry in the account receivable figure. The balance listed in that entry would be the current balance.
16. Based on the information provided in the Balance Sheet, ABC Day Care has total assets of $195,400, total liabilities of $129,500, and total owner's equity of $57,300. This information does not provide enough details to make a definitive statement about the business's success, debt level, or errors in the balance sheet.
17. To determine whether there is a profit or loss for a specific period, you would need to subtract the total expenses from the total revenues. If the resulting amount is positive, there is a profit. If the resulting amount is negative, there is a loss.
18. The correct journal entry for buying a new van for your daycare business would be a $20,000 debit to Vehicles (an asset account) and a $20,000 credit to Notes Payable (a liability account). This entry reflects the increase in the value of the vehicle as an asset and the corresponding increase in the amount owed to First American Bank as a liability.
19. In a double-entry system of bookkeeping, each transaction consists of at least one debit and one credit entry. This ensures that the total value of all debits is equal to the total value of all credits, maintaining the fundamental principle of double-entry bookkeeping, which is that every transaction has an equal and opposite effect on both sides of the accounting equation.
20. The tax that must be paid only by the employer is Federal Unemployment Tax Act (FUTA) tax. This tax is based on the wages paid to employees and is used to fund unemployment compensation benefits.