Question 1

Identify and describe the major steps involved in financial planning.

Accepted Answer

The answer of Identify and describe the major steps involved...

Question 2

A line of credit from a bank guarantees a firm that a specified amount of financing will be available whenever it is needed.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Financial management is more important for a large firm than it is for a small firm.

Accepted Answer

A) True 
 B)False

Question 5

Carlos wants to know the income potential of several different strategic plans for his computer consulting business.Which of the following would be most helpful?

Accepted Answer

A) Cash flow forecast 
B) Capital budget forecast 
C) Long-term forecast 
D) Short-term forecast

Question 6

One activity of the accounting function is to collect payments from overdue customer accounts.

Accepted Answer

A) True 
 B)False

Question 7

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Accepted Answer

A) True 
 B)False

Question 8

A financial manager is responsible for obtaining the necessary money to enable a firm to achieve its goals and objectives.

Accepted Answer

A) True 
 B)False

Question 9

Anna operates a florist shop specializing in weddings.While she knows that her competitors allow customers to buy on credit,she is concerned about the risk and expense of unpaid customer accounts.One strategy to reduce risk and collect sales revenue more quickly would be to accept bank-issued credit cards.

Accepted Answer

A) True 
 B)False

Question 10

There is actually a stronger relationship between finance and marketing than there is between finance and accounting.

Accepted Answer

A) True 
 B)False

Question 11

The most widely used source of short-term funding is:

Accepted Answer

A) trade credit. 
B) commercial finance companies. 
C) factoring. 
D) line of credit.

Question 12

Tiffany's work in the finance department of her firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Tiffany's activities are those of a(n):

Accepted Answer

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

Question 13

Admiral Electric is a widely known,successful manufacturer of industrial motors and related equipment.When Admiral Electric anticipates a need for short-term funds,it offers unsecured promissory notes to investors for 180 days.To obtain short-term financing,Admiral Electric utilizes:

Accepted Answer

A) revolving credit. 
B) commercial paper. 
C) mutual funds. 
D) inventory financing.

Question 14

Karen,a financial manager with Bigbux Incorporated,regularly compares actual revenues and expenses against their projected values.After identifying areas with significant deviations from planned values,she investigates to find the cause of these variances.Karen's activities represent the steps involved in the preparation of Bigbux's capital budget.

Accepted Answer

A) True 
 B)False

Question 15

Suppliers offer trade credit to their business customers by providing merchandise and requiring payment at a later date.

Accepted Answer

A) True 
 B)False

Question 16

As the chief financial officer (CFO)for a medium-sized service company,Shelley 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 Shelley's concern would be to arrange a revolving credit agreement with the bank.

Accepted Answer

A) True 
 B)False

Question 17

To reduce the time and expense of collecting accounts receivables,some firms:

Accepted Answer

A) accept bank-issued credit cards. 
B) adopt a just-in-time inventory policy. 
C) extend credit to new customers. 
D) offer extended payment plans to existing customers.

Question 18

Victoria Nursery offers customers credit terms of 3/15 net 30.This gives customers a:

Accepted Answer

A) three percent discount if they pay in fifteen days. 
B) fifteen percent discount if they pay in three days. 
C) fifteen percent discount if they pay in thirty days. 
D) three percent discount if they pay in thirty days.

Question 19

Which of the following companies faces the problem of undercapitalization?

Accepted Answer

A) A large corporation that has been hit with a major lawsuit because one of its products has a design flaw that has led to serious injuries. 
B) An electric utility that has recently experienced a significant increase in the cost of coal and labour. 
C) A medium-sized company that has decided to buy out a smaller competitor. 
D) A small new company struggling because it has insufficient start-up funds.

Question 20

Budgeting,managing receivables,payables,and inventory,and managing taxes are all part of a(n)______job.

Accepted Answer

A) financial manager's 
B) CPA's 
C) investment banker's 
D) portfolio manager's

Exam 17: Financial Management Appendix C Managing Risk

Identify and describe the major steps involved in financial planning.

A line of credit from a bank guarantees a firm that a specified amount of financing will be available whenever it is needed.

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

Financial management is more important for a large firm than it is for a small firm.

Carlos wants to know the income potential of several different strategic plans for his computer consulting business.Which of the following would be most helpful?

One activity of the accounting function is to collect payments from overdue customer accounts.

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

A financial manager is responsible for obtaining the necessary money to enable a firm to achieve its goals and objectives.

There is actually a stronger relationship between finance and marketing than there is between finance and accounting.

The most widely used source of short-term funding is:

Tiffany's work in the finance department of her firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Tiffany's activities are those of a(n) :

Admiral Electric is a widely known,successful manufacturer of industrial motors and related equipment.When Admiral Electric anticipates a need for short-term funds,it offers unsecured promissory notes to investors for 180 days.To obtain short-term financing,Admiral Electric utilizes:

Suppliers offer trade credit to their business customers by providing merchandise and requiring payment at a later date.

To reduce the time and expense of collecting accounts receivables,some firms:

Victoria Nursery offers customers credit terms of 3/15 net 30.This gives customers a:

Which of the following companies faces the problem of undercapitalization?

Budgeting,managing receivables,payables,and inventory,and managing taxes are all part of a(n) ______job.