Deck 15: Financing and Tracking Business Operations

Question 1

Jason Prows' job this week is to prepare a spreadsheet that shows his company's long-range plans and outlines the expected financial needs for significant purchases such as real estate,manufacturing equipment,plant expansions,and technology.Jason is preparing a(n)________ budget.

A) operating
B) master
C) capital
D) tactical
E) cash flow

Answer 1

C

Question 2

CFO Jorge Sierra needs short-term financing for a large corporation.He decides to issue an unsecured debt instrument of $200,000 to be paid back in 150 days.Jorge is using ________.

A) a mortgage
B) factoring
C) commercial paper
D) retained earnings
E) trade credit

Answer 2

C

Question 3

Your financial manager reports to you,the CEO,that your company's actual monthly financial results closely match,but not exactly match,the monthly budget.This indicates that ________.

A) the company is fulfilling its plans
B) extreme corrective action is needed
C) the company needs to borrow money quickly
D) a planned sale of stock is needed
E) the company should stop doing these monthly comparisons

Answer 3

A

Question 4

Demand deposits include ________ accounts.

A) only checking
B) only savings
C) both checking and savings
D) commercial paper
E) credit card

Question 5

The two divisions that make up MOST finance departments are ________.

A) accounting and product management
B) sales and financial management
C) accounting and financial management
D) sales and product management
E) accounting and payroll

Question 6

Funds that a manager can access at any time up to an amount agreed upon between the bank and the company are called a line of ________.

A) debit
B) credit
C) asset
D) liability
E) obligation

Question 7

Gordon Jimenez' boss tells him to develop a forecast of financial needs.Of the following factors,Gordon will MOST LIKELY consider ________.

A) past company plans that were never implemented
B) actions of companies in other industries
C) the current and future state of the economy
D) the level of production costs from 10 years prior
E) profit levels of companies in other industries

Question 8

All of the following are parts of the foundation of financial management EXCEPT ________.

A) describing the history of double entry bookkeeping
B) tracking past financial transactions
C) controlling current revenues
D) planning for future financial needs of the company
E) controlling current expenses

Question 9

You are a financial manager.Your assistant tells you that there will be a cash flow gap next month,meaning that cash outflows are expected to be ________ cash inflows.

A) less than
B) equal to
C) greater than
D) too low compared to
E) undermined by

Question 10

The strategic planning and budgeting of short- and long-term funds for current and future needs is called ________ management.

A) product
B) strategic
C) needs
D) financial
E) accounting

Question 11

Long-term financing generated by the owners of a company is called ________ financing.

A) secured
B) debenture
C) equity
D) debt
E) bond

Question 12

A financial manager is sometimes referred to as a ________.

A) CFO
B) CFM
C) COO
D) CEO
E) CIO

Question 13

Joseph Coulter needs long-term financing for his company.He contacts Funders Group,which is willing to provide funding in exchange for an ownership stake,an active role in management of Joseph's company,and an opportunity for a large return on its investment.Funders Group is offering ________ capital.

A) debenture
B) venture
C) leverage
D) retained
E) certificate

Question 14

Monitoring cash flow is important because it measures a company's ________.

A) short-term financial health and financial efficiency
B) future needs for equipment
C) long-term financial health and financial efficiency
D) total assets
E) equity

Question 15

Factoring is the process of selling accounts ________ for cash.

A) general
B) loanable
C) payable
D) receivable
E) collateral

Question 16

CFO Danny al Baydah believes that the best indicator of his company's financial strength is how quickly its assets can be turned into cash,or the company's ________.

A) profitability
B) fluidity
C) liquidity
D) liability
E) equity

Question 17

A financial manager is responsible for ________.

A) raising capital for future growth and expansion
B) setting prices for products
C) billing customers and paying staff
D) rating the financial strength of competitors
E) processing payroll

Question 18

As a financial manager,you decide to borrow funds in order to meet payroll.Your company will pay back the funds within nine months.You are seeking ________ financing.

A) long-term
B) short-term
C) retained earnings
D) equity
E) capital

Question 19

Management should compare its budget to ________ performance every month in order to determine if the company is performing as expected.

A) expected
B) planned
C) actual
D) ideal
E) competitors'

Question 20

Laureen Cooley is preparing a spreadsheet that shows inventory,sales,purchases,manufacturing,and marketing costs for her organization.This document is called a(n)________ budget.

A) capital
B) strategic
C) operating
D) tactical
E) minor

Question 21

Your boss asks you to e-mail a spreadsheet that shows how much money came into the company and how much money the company spent last month.When sending the e-mail,you MOST LIKELY will attach the file named ________.

A) Operating_Budget
B) Income_Statement
C) Balance_Sheet
D) Statement_of_Cash_Flows
E) Capital_Budget

Question 22

Your boss asks you to e-mail a spreadsheet that shows the exchange of money between the company and everyone else it deals with over a period of time.When sending the e-mail,you MOST LIKELY will attach the file named ________.

A) Statement_of_Asset_Flows
B) Statement_of_Liability_Flows
C) Statement_of_Cash_Flows
D) Statement_of_Equity_Flows
E) Statement_of_Capital_Expenditures

Question 23

Susan Capelongo manages a department that prepares financial statements to be sent to current and potential stockholders.Susan works in ________.

A) auditing
B) corporate accounting
C) not-for-profit accounting
D) tax accounting
E) government accounting

Question 24

Your boss asks you to e-mail a spreadsheet that shows what the company owns and what it has borrowed (owes)at a fixed point in time and shows the net worth of the business.When sending the e-mail,you MOST LIKELY will attach the file named ________.

A) Income_Statement
B) Statement_of_Cash_Flows
C) Balance_Sheet
D) Capital_Budget
E) Operating_Budget

Question 25

Short-term liabilities are obligations a company is responsible for paying ________.

A) between one year and two years
B) after three years
C) within a year or less
D) never
E) after five years

Question 26

Adam Zarand wants to help his company decide whether or not to shut down an unproductive plant.Which type of accounting will he MOST LIKELY use?

A) managerial
B) tax
C) government
D) financial

Question 27

The clothing and accessories at New Fashion Stores,Inc.are an example of ________ assets.

A) long-term
B) fixed
C) equipment
D) current
E) past due

Question 28

In her work as an accountant,Sandra Garcia recognizes that for every transaction that affects an asset,an equal transaction must also affect either a liability or owners' equity.Sandra is using ________ bookkeeping.

A) double profit
B) double entry
C) bottom line
D) triple entry
E) dividend

Question 29

Mark Lewis manages a corporate department that reviews and evaluates the accuracy of financial reports.Mark works in ________.

A) auditing
B) tax accounting
C) not-for-profit accounting
D) government accounting
E) managerial

Question 30

FASB stands for ________.

A) Financial Accounting Standard Budget
B) Financial Accounting Short-Term Budget
C) Financial Architects Standards Board
D) Financial Accounting Standard Board
E) Financial Accountants Service Budget

Question 31

Tracking a business's income and expenses through a process of recording financial transactions is called ________.

A) sales
B) production
C) strategy
D) accounting
E) budgeting

Question 32

Liquidity is the speed at which assets can be turned into ________.

A) liabilities
B) cash
C) owners' equity
D) inventory
E) stock

Question 33

Accounting is important for ________.

A) large organizations only
B) for-profit companies only
C) small businesses only
D) organizations of all sizes and types
E) Fortune 500 companies only

Question 34

Kay Alden manages a department that prepares annual reports.Kay works in ________.

A) tax accounting
B) auditing
C) financial accounting
D) managerial accounting
E) not-for-profit accounting

Question 35

Short-term liabilities are also known as ________ liabilities.

A) fixed
B) instant
C) debenture
D) current
E) past-due

Question 36

Assets = Liabilities + Owners' Equity is the fundamental ________ equation.

A) asset
B) accounting
C) mathematical
D) corporate
E) profit

Question 37

A common leverage ratio is for a company to have at least ________ times the amount of equity as it has debt.

A) two
B) three
C) four
D) five
E) ten

Question 38

Iris Velez manages a department that calculates payments to be made to federal,state,and local governments.Iris works in ________.

A) managerial accounting
B) auditing
C) tax accounting
D) sales accounting
E) financial

Question 39

The amounts that New Fashion Stores,Inc.owes to clothing manufacturers are an example of ________.

A) assets
B) owners' equity
C) liabilities
D) trademarks
E) accounts receivable

Question 40

Accounting involves a great deal of precision and some degrees of interpretation; therefore,accounting is ________.

A) only an art
B) neither an art nor a science
C) only a science
D) both an art and a science
E) an exercise in futility

Question 41

New Fashion Stores,Inc.received 1,000 t-shirts on the first of the month.By the end of the month,the company had sold 743 shirts.The difference is ________.

A) inventory
B) retained earnings
C) working capital
D) equity
E) accounts payable

Question 42

Last year Huge TV Corp.had net income equaling $5 million.At the end of the year,the corporation had 4 million shares of stock outstanding.The company's earnings per share were ________.

A) $1.25
B) $0.80
C) $1 million
D) $5 million
E) $20 million

Question 43

On an income statement:

A) Assets - Expenses = Loss
B) Revenue - Liabilities = Net Income (or Loss)
C) Revenue - Expenses = Net Income (or Loss)
D) Revenue - Expenses = Owners' Equity
E) Revenue + Expenses = Net Income (or Loss)

Question 44

Factoring is the process of selling accounts receivable for cash instead of using them as collateral for a loan.

Question 45

Current Assets - Current Liabilities = ________ Capital.

A) Working
B) Current
C) Equity
D) Ratio
E) Debt

Question 46

Financial management involves setting up and monitoring controls to make certain the plans and budgets are monitored sufficiently so that the business can reach its financial goals.

Question 47

If a company has negative working capital,its current assets ________ its current liabilities.

A) equal
B) are divided by
C) are less than
D) are greater than
E) are twice

Question 48

Financial statements serve as a basis for management to develop expectations of where the company will be in future periods.

Question 49

The amounts spent by a publishing company to pay for manufacturing its books is called ________.

A) cost of goods sold
B) operating expenses
C) cost of goods purchased
D) net loss
E) revenue

Question 50

The money a company makes just from its products is called ________.

A) gross capital
B) net equity
C) gross profit
D) net profit
E) revenue

Question 51

When New Fashion Stores,Inc.built 100 new stores,it recorded to outflowing cash in the ________ activities section of its statement of cash flows.

A) financing
B) investing
C) operating
D) maintaining
E) amortizing

Question 52

When New Fashion Stores,Inc.paid a dividend to its shareholders,it recorded to outflowing cash in the ________ activities section of its statement of cash flows.

A) investing
B) financing
C) operating
D) maintaining
E) capitalizing

Question 53

In MOST companies,accounting is the only responsibility of the finance department.

Question 54

Numbers used to compare current data to data from previous years,competitors' data,or industry averages is called ________ analysis.

A) ratio
B) current
C) debt
D) inventory
E) equity

Question 55

Current assets at New Fashion Stores,Inc.are $20 million,and current liabilities are $10 million.The company's current ratio is ________.

A) 0.50
B) 10.00
C) 2.00
D) 20.00
E) 5.00

Question 56

Total liabilities at New Fashion Stores,Inc.are $5 million,and total owners' equity is $4 million.The company's debt to equity ratio is ________.

A) 4.00
B) 5.00
C) 1.25
D) 0.80
E) 1.00

Question 57

Housing Repair Co.has total revenue of $100,000.COGS is $40,000.The company's gross profit margin is ________.

A) 0.40
B) 1.40
C) 0.67
D) 0.60
E) 1.50

Question 58

All of the following can be determined from a statement of cash flows EXCEPT the company's ability to ________.

A) pay its bills
B) manage production
C) buy new inventory
D) afford salary obligations
E) make investments in the business

Question 59

On a balance sheet,the difference between cash and cash equivalent figures between periods is the same value that appears at the bottom of the ________ for the same period.

A) income statement
B) operating budget
C) statement of cash flows
D) equity statement
E) capital budget

Question 60

Short-term financing is any type of financing that is repaid within 3 months or less.

Question 61

The biggest disadvantage of bond financing is the dilution of ownership.

Question 62

Double entry bookkeeping recognizes that for every transaction that affects an asset,an equal transaction must also affect either a liability or owners' equity.

Question 63

An airline's long-term leases of its jets are examples of current liabilities.

Question 64

Depreciation helps keep the accounting equation in balance by matching the expense of a liability with the revenue that liability is expected to generate.

Question 65

The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board,which is responsible for overseeing financial audits of public companies.

Question 66

Financing with equity allows a company to retain profits and cash rather than to make interest payments and to pay back debt.

Question 67

Accounts receivable is an example of a fixed asset.

Question 68

Leverage is the amount of debt used to finance a firm's assets.

Question 69

Commercial banks are financial institutions that raise funds from businesses and individuals in the form of checking and savings accounts and use those funds to make loans to businesses and individuals.

Question 70

A common set of country-neutral accounting standards is known as International Financial Reporting Standards (IFRSs).

Question 71

A university would consider its students' tuition payments to be revenue.

Question 72

Financial statements represent what has happened in the past.

Question 73

Government and not-for-profit accounting refers to the accounting required for organizations that are not focused on generating a profit,such as legislative bodies and charities.

Question 74

Using leverage is always beneficial.

Question 75

Because BackBeatMusic.com's current assets are less than its current liabilities,the company has positive working capital.

Question 76

Because accounting requires a great deal of precision and accuracy,there is no room for interpretation in accounting.

Question 77

Assets at New Fashion Stores,Inc.equal $10 million.Liabilities equal $8 million.Therefore,owners' equity equals $2 million.

Question 78

Double entry bookkeeping means that two independent accountants perform all financial calculations,to ensure that no mistakes are made.

Question 79

The longest period covered in financial accounting reports is three months.

Question 80

A commercial finance company is an alternative to a bank as a source of short-term financing.