Question 1

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  True

Question 2

Zachary is going to major in business. However, he has never had much interest in subjects with numbers. He would like to avoid taking any finance courses if possible. What should Zachary do?

Accepted Answer

A)  Avoid finance courses and focus on subjects that he enjoys. 
B)  Take a finance course to satisfy graduation requirements. 
C)  Realize that his success in business requires an understanding of financial issues. 
D)  Change majors and go into the arts. 
A)  Avoid finance courses and focus on subjects that he enjoys. 
B)  Take a finance course to satisfy graduation requirements. 
C)  Realize that his success in business requires an understanding of financial issues. 
D)  Change majors and go into the arts. C

Question 3

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period longer than one year.

Accepted Answer

A)  cash flow 
B)  short-term 
C)  capital expenditures 
D)  long-term 
A)  cash flow 
B)  short-term 
C)  capital expenditures 
D)  long-term D

Question 4

While firms finance their long-term needs with debt financing, their short-term needs are served by equity financing.

Accepted Answer

A) True 
 B)False

Question 5

According to the box, Adapting to Change, most online loans are safe with a low interest rate.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is most accurate?

Accepted Answer

A)  Accounting and finance are not related. 
B)  Financial managers keep the books for a firm. 
C)  Financial managers need to understand accounting. 
D)  Nonprofit organizations must choose between accounting and finance. 
A)  Accounting and finance are not related. 
B)  Financial managers keep the books for a firm. 
C)  Financial managers need to understand accounting. 
D)  Nonprofit organizations must choose between accounting and finance.

Question 7

As the chief financial officer (CFO) for a medium-sized service company, Cora is concerned about the possibility of temporary cash shortages. Given the irregular cash flows from seasonal sales, she wants to ensure that her company's bank will provide adequate funds to cover any potential cash flow problem. The best strategy to ease Cora's concern would be to arrange a revolving credit agreement with the bank.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about taxes is accurate?

Accepted Answer

A)  Taxes represent an inflow of cash to the firm. 
B)  Profitable businesses usually pay taxes. 
C)  Tax management falls within the responsibility of marketing managers. 
D)  Taxes cannot be managed because of fluctuations in political policy. 
A)  Taxes represent an inflow of cash to the firm. 
B)  Profitable businesses usually pay taxes. 
C)  Tax management falls within the responsibility of marketing managers. 
D)  Taxes cannot be managed because of fluctuations in political policy.

Question 9

Most companies have the ready cash available to make large purchases.

Accepted Answer

A) True 
 B)False

Question 10

A budget's primary purpose is to provide managers with a financial summary of past operations.

Accepted Answer

A) True 
 B)False

Question 11

Trade credit is the practice of buying goods now and paying for them later.

Accepted Answer

A) True 
 B)False

Question 12

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 credit 
A)  asset drawing account 
B)  capital drawing agreement 
C)  reserve account 
D)  line of credit

Question 13

Rock Solid Concrete Company does not offer customers a cash discount for early payment of their accounts receivable. As a result, most customers wait to pay their bill on the last day before late penalties are charged. These customers apparently understand the

Accepted Answer

A)  time value of money. 
B)  benefits of tax-deductible expenses. 
C)  financial community's perception of equity financing. 
D)  government's regulations of the chemical industry. 
A)  time value of money. 
B)  benefits of tax-deductible expenses. 
C)  financial community's perception of equity financing. 
D)  government's regulations of the chemical industry.

Question 14

Which of the following activities is most likely to be performed by a financial manager?

Accepted Answer

A)  design of a marketable product that satisfies an unmet need 
B)  identification of specific target markets for a firm's goods 
C)  preparation of the balance sheet and income statement for the firm 
D)  analysis of the tax implications of various managerial decisions 
A)  design of a marketable product that satisfies an unmet need 
B)  identification of specific target markets for a firm's goods 
C)  preparation of the balance sheet and income statement for the firm 
D)  analysis of the tax implications of various managerial decisions

Question 15

Financial managers use data prepared by accountants to develop strategies for improving the financial performance of the firm.

Accepted Answer

A) True 
 B)False

Question 16

Small businesses rely heavily on long-term financing.

Accepted Answer

A) True 
 B)False

Question 17

When Asher received a loan from Bigbux Bank, he was required to pledge his house and car as collateral. The money from the loan was used to start his new business, which unfortunately failed within 6 months. The bank can now claim Asher's house and car to satisfy its claim.

Accepted Answer

A) True 
 B)False

Question 18

The first step in financial planning is to develop a budget to better control costs.

Accepted Answer

A) True 
 B)False

Question 19

An unsecured corporate bond is known as a debenture bond.

Accepted Answer

A) True 
 B)False

Question 20

Mort is seriously considering a major expansion in the size of his funeral home. The money spent on this type of project would be classified as a(n)

Accepted Answer

A)  capital expenditure. 
B)  equity expenditure. 
C)  off-budget expense. 
D)  depreciation charge. 
A)  capital expenditure. 
B)  equity expenditure. 
C)  off-budget expense. 
D)  depreciation charge.

Exam 18: Financial Management

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

Zachary is going to major in business. However, he has never had much interest in subjects with numbers. He would like to avoid taking any finance courses if possible. What should Zachary do?

A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period longer than one year.

While firms finance their long-term needs with debt financing, their short-term needs are served by equity financing.

According to the box, Adapting to Change, most online loans are safe with a low interest rate.

Which of the following statements is most accurate?

Which of the following statements about taxes is accurate?

Most companies have the ready cash available to make large purchases.

A budget's primary purpose is to provide managers with a financial summary of past operations.

Trade credit is the practice of buying goods now and paying for them later.

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.

Rock Solid Concrete Company does not offer customers a cash discount for early payment of their accounts receivable. As a result, most customers wait to pay their bill on the last day before late penalties are charged. These customers apparently understand the

Which of the following activities is most likely to be performed by a financial manager?

Financial managers use data prepared by accountants to develop strategies for improving the financial performance of the firm.

Small businesses rely heavily on long-term financing.

When Asher received a loan from Bigbux Bank, he was required to pledge his house and car as collateral. The money from the loan was used to start his new business, which unfortunately failed within 6 months. The bank can now claim Asher's house and car to satisfy its claim.

The first step in financial planning is to develop a budget to better control costs.

An unsecured corporate bond is known as a debenture bond.

Mort is seriously considering a major expansion in the size of his funeral home. The money spent on this type of project would be classified as a(n)

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Appendix: Working Within the Legal Environment

Appendix: Using Technology to Manage Information

Appendix: Managing Risk

Appendix: Managing Personal Finances

Filters