Question 1

Managing a firm's resources so that it can meet its goals and objectives is the goal of financial accounting.

Accepted Answer

A) True 
 B)False

Question 2

Trade credit means the seller will sell and deliver products and/or services to the buyer, with the understanding that the buyer will pay for these products and/or services at a later date.

Accepted Answer

A) True 
 B)False

Question 3

An internal auditor is responsible for paying the company's bills and collecting overdue payments from customers.

Accepted Answer

A) True 
 B)False

Question 4

Charlie Chicken Restaurants announced it plans to issue $300 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means

Accepted Answer

A)  the corporation will borrow $300 million worth of long-term financing. The bond issue will not carry any collateral. 
B)  the corporation will issue $300 million worth of equity financing. The bond issue will be backed by the property and buildings purchased with the funds. 
C)  the corporation will borrow $300 million worth of long-term financing. The issue will be backed by the property and buildings purchased with the funds. 
D)  the corporation will issue $300 million worth of interest-free bonds. Financiers will be paid from the revenues created by the individual franchises. 
A)  the corporation will borrow $300 million worth of long-term financing. The bond issue will not carry any collateral. 
B)  the corporation will issue $300 million worth of equity financing. The bond issue will be backed by the property and buildings purchased with the funds. 
C)  the corporation will borrow $300 million worth of long-term financing. The issue will be backed by the property and buildings purchased with the funds. 
D)  the corporation will issue $300 million worth of interest-free bonds. Financiers will be paid from the revenues created by the individual franchises.

Question 5

A comptroller is the chief accounting officer of an organization.

Accepted Answer

A) True 
 B)False

Question 6

Accountants truly represent the financial managers of a business.

Accepted Answer

A) True 
 B)False

Question 7

Gavin, a financial manager of a small firm, needs to determine how much his company will have to borrow in the coming months. He also needs to establish when the borrowed funds will be needed. The preparation of the cash budget will help.

Accepted Answer

A) True 
 B)False

Question 8

A bond represents a long-term debt obligation of a corporation or government.

Accepted Answer

A) True 
 B)False

Question 9

One very important responsibility of the finance department in both large and small businesses involves acquiring needed funds to operate the business.

Accepted Answer

A) True 
 B)False

Question 10

The cost of capital is the rate of return a firm must earn in order to meet the demands of its lenders and expectations of its equity holders.

Accepted Answer

A) True 
 B)False

Question 11

Factoring represents the least expensive way for a firm to raise short-term funds.

Accepted Answer

A) True 
 B)False

Question 12

A company's capital budget helps management plan for cash shortages or surpluses.

Accepted Answer

A) True 
 B)False

Question 13

The interest paid for debt financing is a tax-deductible expense for the firm.

Accepted Answer

A) True 
 B)False

Question 14

While finance is a critical activity for profit-seeking organizations, by definition nonprofit organizations are not required to fulfill the finance function.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would be most helpful for a company looking to know the income potential during the next five years?

Accepted Answer

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

Question 16

Tax payments are important to the finance manager because they represent a cash inflow to a firm.

Accepted Answer

A) True 
 B)False

Question 17

The effective management of accounts receivable requires financial managers to

Accepted Answer

A)  review the credit history of new customers. 
B)  provide prompt cash payments to suppliers. 
C)  allow customers more time in paying their past due accounts. 
D)  refuse bank-issued credit cards. 
A)  review the credit history of new customers. 
B)  provide prompt cash payments to suppliers. 
C)  allow customers more time in paying their past due accounts. 
D)  refuse bank-issued credit cards.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Equity financing refers to the money a firm receives from the sale of bonds.

Accepted Answer

A) True 
 B)False

Exam 18: Financial Management

Managing a firm's resources so that it can meet its goals and objectives is the goal of financial accounting.

Trade credit means the seller will sell and deliver products and/or services to the buyer, with the understanding that the buyer will pay for these products and/or services at a later date.

An internal auditor is responsible for paying the company's bills and collecting overdue payments from customers.

Charlie Chicken Restaurants announced it plans to issue $300 million in debenture bonds to fund the expansion of its fast food chain of restaurants. In financial terms, this means

A comptroller is the chief accounting officer of an organization.

Accountants truly represent the financial managers of a business.

Gavin, a financial manager of a small firm, needs to determine how much his company will have to borrow in the coming months. He also needs to establish when the borrowed funds will be needed. The preparation of the cash budget will help.

A bond represents a long-term debt obligation of a corporation or government.

One very important responsibility of the finance department in both large and small businesses involves acquiring needed funds to operate the business.

The cost of capital is the rate of return a firm must earn in order to meet the demands of its lenders and expectations of its equity holders.

Factoring represents the least expensive way for a firm to raise short-term funds.

A company's capital budget helps management plan for cash shortages or surpluses.

The interest paid for debt financing is a tax-deductible expense for the firm.

While finance is a critical activity for profit-seeking organizations, by definition nonprofit organizations are not required to fulfill the finance function.

Which of the following would be most helpful for a company looking to know the income potential during the next five years?

Tax payments are important to the finance manager because they represent a cash inflow to a firm.

The effective management of accounts receivable requires financial managers to

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

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

Equity financing refers to the money a firm receives from the sale of bonds.

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

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