Question 1

Performance plans are plans that tie management compensation to measures such as EPS or growth in EPS.

Accepted Answer

A) True 
 B)False  True

Question 2

High net cash flow with fixed risk is generally associated with a higher share price.

Accepted Answer

A) True 
 B)False  True

Question 3

A major weakness of a partnership is ________.

Accepted Answer

A)  the difficulty in maintaining owners' control 
B)  the difficulty in liquidating or transferring ownership 
C)  the double taxation of income 
D)  its high organizational costs 
A)  the difficulty in maintaining owners' control 
B)  the difficulty in liquidating or transferring ownership 
C)  the double taxation of income 
D)  its high organizational costs B

Question 4

Managerial finance is concerned with design and delivery of advice and financial products to individuals, businesses, and governments.

Accepted Answer

A) True 
 B)False

Question 5

In planning and managing the requirements of a firm, the financial manager is concerned with ________.

Accepted Answer

A)  the mix and type of assets, but not the type of financing utilized 
B)  the type of financing utilized, but not the mix and type of assets 
C)  the acquisition of fixed assets, allowing someone else to plan the level of current assets required, and the market value of the share 
D)  the mix and type of assets, the type of financing utilized, and analysis in order to monitor the financial condition 
A)  the mix and type of assets, but not the type of financing utilized 
B)  the type of financing utilized, but not the mix and type of assets 
C)  the acquisition of fixed assets, allowing someone else to plan the level of current assets required, and the market value of the share 
D)  the mix and type of assets, the type of financing utilized, and analysis in order to monitor the financial condition

Question 6

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

Accepted Answer

A) True 
 B)False

Question 7

A corporate controller is an officer responsible for a firm's financial activities such as financial planning and fund raising, making capital expenditure decisions, and managing cash, credit, the pension fund, and foreign exchange.

Accepted Answer

A) True 
 B)False

Question 8

Managerial finance ________.

Accepted Answer

A)  involves tasks such as budgeting, financial forecasting, cash management, and funds procurement 
B)  involves the design and delivery of advice and financial products 
C)  recognizes funds on an accrual basis 
D)  devotes the majority of its attention to the collection and presentation of financial data 
A)  involves tasks such as budgeting, financial forecasting, cash management, and funds procurement 
B)  involves the design and delivery of advice and financial products 
C)  recognizes funds on an accrual basis 
D)  devotes the majority of its attention to the collection and presentation of financial data

Question 9

Marginal analysis states that financial decisions should be made and actions should be taken only when ________.

Accepted Answer

A)  marginal revenue equals marginal cost 
B)  benefits equal costs 
C)  added benefits exceed added costs 
D)  added benefits are greater than zero 
A)  marginal revenue equals marginal cost 
B)  benefits equal costs 
C)  added benefits exceed added costs 
D)  added benefits are greater than zero

Question 10

Johnson, Inc. has just ended the calendar year making a sale in the amount of $10,000 of merchandise purchased during the year at a total cost of $7,000. Although the firm paid in full for the merchandise during the year, it is yet to collect at year end from the customer. The net profit and cash flow from this sale for the year are ________.

Accepted Answer

A)  $3,000 and $10,000, respectively 
B)  $3,000 and -$7,000, respectively 
C)  $7,000 and -$3,000, respectively 
D)  $3,000 and $7,000, respectively 
A)  $3,000 and $10,000, respectively 
B)  $3,000 and -$7,000, respectively 
C)  $7,000 and -$3,000, respectively 
D)  $3,000 and $7,000, respectively

Question 11

A ________ is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

Accepted Answer

A)  treasurer 
B)  controller 
C)  foreign exchange manager 
D)  pension fund manager 
A)  treasurer 
B)  controller 
C)  foreign exchange manager 
D)  pension fund manager

Question 12

Which of the following is the responsibility of a finance manager?

Accepted Answer

A)  processing purchase orders and invoices 
B)  ensuring accounts payable are paid on time 
C)  preparing the monthly income statement 
D)  analyzing the capital needs of the firm 
A)  processing purchase orders and invoices 
B)  ensuring accounts payable are paid on time 
C)  preparing the monthly income statement 
D)  analyzing the capital needs of the firm

Question 13

The financial manager must look beyond financial statements to obtain insight into developing or existing problems since the accrual accounting data do not fully describe the circumstances of a firm.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an example of agency cost?

Accepted Answer

A)  costs incurred for setting up an agency 
B)  failure of making the best investment decision 
C)  payment of income tax 
D)  payment of interest 
A)  costs incurred for setting up an agency 
B)  failure of making the best investment decision 
C)  payment of income tax 
D)  payment of interest

Question 15

A sole proprietor has unlimited liability; his or her total investment in the business, but not his or her personal assets, can be taken to satisfy creditors.

Accepted Answer

A) True 
 B)False

Question 16

An effective ethics program ________.

Accepted Answer

A)  can weaken corporate value 
B)  has no effect on a corporation's value 
C)  can enhance a corporation's value 
D)  will result in high employee attrition rate 
A)  can weaken corporate value 
B)  has no effect on a corporation's value 
C)  can enhance a corporation's value 
D)  will result in high employee attrition rate

Question 17

Profit maximization as the goal of the firm is not ideal because ________.

Accepted Answer

A)  profits are only accounting measures 
B)  cash flows are more representative of financial strength 
C)  profit maximization does not consider risk 
D)  profits today are less desirable than profits earned in future years 
A)  profits are only accounting measures 
B)  cash flows are more representative of financial strength 
C)  profit maximization does not consider risk 
D)  profits today are less desirable than profits earned in future years

Question 18

Which of the following is the best measure to ensure that management decisions are in the best interest of the stockholders?

Accepted Answer

A)  fire managers who are inefficient 
B)  remove management's perquisites 
C)  tie management compensation to the performance of the company's common stock price 
D)  tie management compensation to the level of dividend per share 
A)  fire managers who are inefficient 
B)  remove management's perquisites 
C)  tie management compensation to the performance of the company's common stock price 
D)  tie management compensation to the level of dividend per share

Question 19

The goal of business ethics is to motivate business and market participants to adhere to both the letter and the spirit of laws and regulations in all aspects of business and professional practice.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of a partnership and a corporation?

Accepted Answer

A)  In a corporation, income is taxed at the corporate level; whereas, in a partnership, income is taxed twice. 
B)  In a partnership, income is taxed at the corporate level; whereas, in a corporation, income is taxed twice. 
C)  Income from both forms of organizations are double-taxed. 
D)  In a partnership, income is exempted from tax up to $10 million; whereas, in a corporation, income is taxed twice. 
A)  In a corporation, income is taxed at the corporate level; whereas, in a partnership, income is taxed twice. 
B)  In a partnership, income is taxed at the corporate level; whereas, in a corporation, income is taxed twice. 
C)  Income from both forms of organizations are double-taxed. 
D)  In a partnership, income is exempted from tax up to $10 million; whereas, in a corporation, income is taxed twice.

Performance plans are plans that tie management compensation to measures such as EPS or growth in EPS.

High net cash flow with fixed risk is generally associated with a higher share price.

A major weakness of a partnership is ________.

Managerial finance is concerned with design and delivery of advice and financial products to individuals, businesses, and governments.

In planning and managing the requirements of a firm, the financial manager is concerned with ________.

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

A corporate controller is an officer responsible for a firm's financial activities such as financial planning and fund raising, making capital expenditure decisions, and managing cash, credit, the pension fund, and foreign exchange.

Managerial finance ________.

Marginal analysis states that financial decisions should be made and actions should be taken only when ________.

A ________ is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

Which of the following is the responsibility of a finance manager?

The financial manager must look beyond financial statements to obtain insight into developing or existing problems since the accrual accounting data do not fully describe the circumstances of a firm.

Which of the following is an example of agency cost?

A sole proprietor has unlimited liability; his or her total investment in the business, but not his or her personal assets, can be taken to satisfy creditors.

An effective ethics program ________.

Profit maximization as the goal of the firm is not ideal because ________.

Which of the following is the best measure to ensure that management decisions are in the best interest of the stockholders?

The goal of business ethics is to motivate business and market participants to adhere to both the letter and the spirit of laws and regulations in all aspects of business and professional practice.

Which of the following is true of a partnership and a corporation?

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 1: The Role of Managerial Finance

Performance plans are plans that tie management compensation to measures such as EPS or growth in EPS.

High net cash flow with fixed risk is generally associated with a higher share price.

A major weakness of a partnership is ________.

Managerial finance is concerned with design and delivery of advice and financial products to individuals, businesses, and governments.

In planning and managing the requirements of a firm, the financial manager is concerned with ________.

The profit maximization goal ignores the timing of returns, does not directly consider cash flows, and ignores risk.

A corporate controller is an officer responsible for a firm's financial activities such as financial planning and fund raising, making capital expenditure decisions, and managing cash, credit, the pension fund, and foreign exchange.

Managerial finance ________.

Marginal analysis states that financial decisions should be made and actions should be taken only when ________.

A ________ is responsible for the firm's accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

Which of the following is the responsibility of a finance manager?

The financial manager must look beyond financial statements to obtain insight into developing or existing problems since the accrual accounting data do not fully describe the circumstances of a firm.

Which of the following is an example of agency cost?

A sole proprietor has unlimited liability; his or her total investment in the business, but not his or her personal assets, can be taken to satisfy creditors.

An effective ethics program ________.

Profit maximization as the goal of the firm is not ideal because ________.

Which of the following is the best measure to ensure that management decisions are in the best interest of the stockholders?

The goal of business ethics is to motivate business and market participants to adhere to both the letter and the spirit of laws and regulations in all aspects of business and professional practice.

Which of the following is true of a partnership and a corporation?

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters