Question 1

Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

Accepted Answer

The operating budget (master budget)ties...

Question 2

A firm negotiates a(n) _________ with its bank.This arrangement gives the firm access to a specified amount of unsecured short-term funds,provided the bank has the funds available.

Accepted Answer

A)   asset drawing account
B)   capital drawing agreement
C)   reserve account
D)   line of creditE) A) and B)
F) A) and C)

Question 3

Acquiring and storing inventory represents a sizable expenditure for many businesses.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following represents a capital expenditure?

Accepted Answer

A)   Issuing paychecks to workers
B)   Paying for advertising on a local radio station
C)   Purchasing raw materials to be used in the production of a firm's product
D)   Purchasing a building to be used for office spaceE) All of the above
F) B) and C)

Question 5

One of the primary factors that influences the interest rate a firm pays on long-term loans is the:

Accepted Answer

A)   Intensity of competition the firm faces with new products.
B)   Current level of government regulations.
C)   General level of market interest rates.
D)   Exchange rate of the euro to the U.S.dollar.E) B) and D)
F) None of the above C

Question 6

Which of the following presents an effective technique to improve cash management?

Accepted Answer

A)   Speed up cash payments and slow down cash collections
B)   Speed up cash collections and slow down cash payments
C)   Speed up both collections and payments of cash
D)   Slow down both the payment and collections of cashE) A) and B)
F) A) and C)

Question 7

Much of a financial manager's day-to-day activities involve managing the short-term financial needs of the firm.

Accepted Answer

A) True 
 B)False

Question 8

If you are at the Phoenix Sky Harbor International Airport,you will no longer get a pat-down if you go through the metal detector.The airport now has full body screening ports that scan the entire body and readily detect weapons or explosive devices that someone may want to take on board a plane.These expensive devices represent:

Accepted Answer

A)   Long-term assets
B)   Short-term assets
C)   Intangible assets
D)   Interest-bearing assetsE) A) and D)
F) B) and D)

Question 9

Equity financing represents funds acquired from within the firm or through the sale of stock,representing ownership in the company.

Accepted Answer

A) True 
 B)False

Question 10

The rationale behind offering customers credit is:

Accepted Answer

A)   Permitting customers to pay with credit cards or on credit makes it easier for them to buy,and it also attracts new customers.
B)   Offering customer's credit helps with the firm's cash flow position.
C)   Offering customer's credit helps match revenues with expenses for the same time period.
D)   Permitting customers to pay with credit cards or on credit forces a company to rely less on accounts receivables and more on accounts payables.E) C) and D)
F) None of the above

Question 11

Small businesses rely heavily on long-term financing.

Accepted Answer

A) True 
 B)False

Question 12

A capital budget combines all of the other budgets into one detailed plan for monitoring the operations of the firm.

Accepted Answer

A) True 
 B)False

Question 13

Many small businesses rely on factoring as a source of short-term financing because:

Accepted Answer

A)   factoring provides a much cheaper source of funds than bank loans.
B)   interest paid to a factor qualifies for a tax credit.
C)   small firms often find it difficult to qualify for bank loans.
D)   loans provided by factors do not require collateral.E) B) and C)
F) A) and C) C

Question 14

Which business function involves credit management/collecting funds from customers?

Accepted Answer

A)   Accounting
B)   Production
C)   Marketing
D)   FinanceE) All of the above
F) None of the above

Question 15

Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.

Accepted Answer

A) True 
 B)False

Question 16

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Accepted Answer

A) True 
 B)False

Question 17

Undercapitalization refers to the problem of insufficient start-up funds.

Accepted Answer

A) True 
 B)False

Question 18

Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as a(n) :

Accepted Answer

A)   internal auditor.
B)   comptroller.
C)   CPA.
D)   financial advisor.E) A) and C)
F) B) and D) A

Question 19

Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

Accepted Answer

A) True 
 B)False

Question 20

Since short-term financial forecasts predict expected future events,they should not be influenced by recent financial statements.

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

Correct Answer
verified
The operating budget (master budget)ties...
View Answer

A firm negotiates a(n) _________ with its bank.This arrangement gives the firm access to a specified amount of unsecured short-term funds,provided the bank has the funds available.

Correct Answer
verified

Acquiring and storing inventory represents a sizable expenditure for many businesses.

Correct Answer
verified

Which of the following represents a capital expenditure?

Correct Answer
verified

One of the primary factors that influences the interest rate a firm pays on long-term loans is the:

Correct Answer
verified
C

Which of the following presents an effective technique to improve cash management?

Correct Answer
verified

Much of a financial manager's day-to-day activities involve managing the short-term financial needs of the firm.

Correct Answer
verified

Correct Answer
verified

Equity financing represents funds acquired from within the firm or through the sale of stock,representing ownership in the company.

Correct Answer
verified

The rationale behind offering customers credit is:

Correct Answer
verified

Small businesses rely heavily on long-term financing.

Correct Answer
verified

A capital budget combines all of the other budgets into one detailed plan for monitoring the operations of the firm.

Correct Answer
verified

Many small businesses rely on factoring as a source of short-term financing because:

Correct Answer
verified
C

Which business function involves credit management/collecting funds from customers?

Correct Answer
verified

Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.

Correct Answer
verified

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Correct Answer
verified

Undercapitalization refers to the problem of insufficient start-up funds.

Correct Answer
verified

Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as a(n) :

Correct Answer
verified
A

Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

Correct Answer
verified

Since short-term financial forecasts predict expected future events,they should not be influenced by recent financial statements.

Correct Answer
verified

Exam 18: Financial Management

Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

Correct AnswerverifiedThe operating budget (master budget)ties...View AnswerShow Answer

A firm negotiates a(n) _________ with its bank.This arrangement gives the firm access to a specified amount of unsecured short-term funds,provided the bank has the funds available.

Correct AnswerverifiedShow Answer

Acquiring and storing inventory represents a sizable expenditure for many businesses.

Correct AnswerverifiedShow Answer

Which of the following represents a capital expenditure?

Correct AnswerverifiedShow Answer

One of the primary factors that influences the interest rate a firm pays on long-term loans is the:

Correct AnswerverifiedC

Which of the following presents an effective technique to improve cash management?

Correct AnswerverifiedShow Answer

Much of a financial manager's day-to-day activities involve managing the short-term financial needs of the firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Equity financing represents funds acquired from within the firm or through the sale of stock,representing ownership in the company.

Correct AnswerverifiedShow Answer

The rationale behind offering customers credit is:

Correct AnswerverifiedShow Answer

Small businesses rely heavily on long-term financing.

Correct AnswerverifiedShow Answer

A capital budget combines all of the other budgets into one detailed plan for monitoring the operations of the firm.

Correct AnswerverifiedShow Answer

Many small businesses rely on factoring as a source of short-term financing because:

Correct AnswerverifiedC

Which business function involves credit management/collecting funds from customers?

Correct AnswerverifiedShow Answer

Finance is the function in a business that acquires funds for the firm and manages those funds within the firm.

Correct AnswerverifiedShow Answer

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Correct AnswerverifiedShow Answer

Undercapitalization refers to the problem of insufficient start-up funds.

Correct AnswerverifiedShow Answer

Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as a(n) :

Correct AnswerverifiedA

Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

Correct AnswerverifiedShow Answer

Since short-term financial forecasts predict expected future events,they should not be influenced by recent financial statements.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The operating budget (master budget)ties...
View Answer

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C

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C

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A

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