Deck 15: Financing and Tracking Business Operations

Question 1

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

Answer 1

False

Question 2

Robin Airline's long-term leases of its jets are examples of current liabilities.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

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 6

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

Question 7

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 8

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

Question 9

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

Question 10

Financial statements represent what has happened in the past.

Question 11

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 12

Secured bonds are issued with no collateral.

Question 13

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 14

Accounts receivable is an example of a fixed asset.

Question 15

To evaluate the best financing option, a financial manager must first match the length of the financing to the length of the need.

Question 16

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

Question 17

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

Question 18

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

Question 19

Assets are the amounts that a companies owes to its creditors.

Question 20

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

Question 21

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

Question 22

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

Question 23

You work at a fast food restaurant. Your wages are an example of operating expenses.

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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 and expenses
D)planning for future financial needs of the company

Question 29

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

Question 30

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

Question 31

A company's budget outlines all of the following EXCEPT ________.

A)staffing recommendations
B)planned cash flows
C)expected operating expenses
D)anticipated revenues

Question 32

Your school considers your tuition payments to be revenue.

Question 33

A highly efficient company and potential good investment must have a high earnings per share ratio.

Question 34

The statement of cash flows tells how efficiently management generates and uses cash.

Question 35

A financial manager is sometimes referred to as a ________.

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

Question 36

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

Question 37

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

Question 38

The financing activities section of a statement of cash flows includes cash used or provided by the core business of the company.

Question 39

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

Question 40

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

Question 41

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

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

Question 42

Because she believes her company has an excellent reputation for creditworthiness, corporate treasurer Lucia Diaz decides to issue ________ bonds that are not backed by any collateral.

A)secured
B)equity
C)commercial paper
D)unsecured

Question 43

________ is often called the language of business.

A)English
B)Accounting
C)Marketing
D)Spanish

Question 44

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

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

Question 45

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

Question 46

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

Question 47

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

Question 48

Unsecured bonds are also called ________ bonds.

A)debenture
B)debit
C)divested
D)dividend

Question 49

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 50

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

Question 51

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

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

Question 52

Accounting is important for ________.

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

Question 53

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

Question 54

Factoring is the process of selling accounts ________ for cash.

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

Question 55

Chief financial officer Ellen Soroti asks her company's bank for a loan. The bank agrees and says that no collateral is required. Ellen's company is being granted a(n)________ loan.

A)unwritten
B)secured
C)equity
D)unsecured

Question 56

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

Question 57

Demand deposits include ________ accounts.

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

Question 58

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

Question 59

FASB stands for ________.

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

Question 60

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

Question 61

Your boss asks you to email 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 email, 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

Question 62

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

Question 63

A ________ debt to equity ratio number means that a company is using ________ leverage and has ________ equity.

A)lower; more; more
B)higher; more; more
C)higher; less; more
D)lower; less; more

Question 64

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

Question 65

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

Question 66

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

A)long-term
B)fixed
C)equipment
D)current

Question 67

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

Question 68

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

Question 69

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

Question 70

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

Question 71

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

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

Question 72

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

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

Question 73

Your boss asks you to email 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 email, you MOST LIKELY will attach the file named ________.

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

Question 74

On an income statement, ________ - ________ = ________.

A)assets; expenses; loss
B)revenue; liabilities; profit
C)revenue; expenses; profit (or loss)
D)revenue; expenses; owners' equity

Question 75

Short-term liabilities are also known as ________ liabilities.

A)fixed
B)instant
C)debenture
D)current

Question 76

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

Question 77

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

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

Question 78

Current Assets - Current Liabilities = ________ Capital.

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

Question 79

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

A)assets
B)owners' equity
C)liabilities
D)trademarks

Question 80

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

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