Question 1

Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as an):

Accepted Answer

Drew's job responsibilities align with those of an internal auditor, whose role is to review and evaluate a company's financial records and procedures to ensure compliance with regulations, identify potential risks or fraudulent activities, and provide recommendations for improvement. A comptroller is typically responsible for managing an organization's accounting practices and financial reporting, while a CPA is a certified public accountant who has completed specific education and licensing requirements to offer accounting services to individuals or businesses. A financial advisor typically provides investment advice and helps clients plan for their financial goals.

Question 2

An effective budget requires:

Accepted Answer

An effective budget requires accurate forecasts in order to set realistic financial goals and allocate resources accordingly. While management approval and stakeholder consensus may be important for buy-in and implementation, they are not necessarily prerequisites for creating an effective budget. A successful advertising campaign is also not directly related to the budgeting process.

Question 3

Carlos is the manager of Oh! Canada Sporting Goods.During the past six months,his cash expenditures have exceeded his cash receipts.Oh! Canada is suffering from an)________ problem.

Accepted Answer

The fact that Carlos' cash expenditures have exceeded his cash receipts indicates that he is experiencing a cash flow problem. This means that there is not enough money coming in to cover the money going out, which can lead to financial instability and difficulty in meeting financial obligations. Option A (accounting) may refer to issues related to recording financial transactions, but that is not the main issue here. Undercapitalization (option B) refers to not having enough capital to start or operate a business, which is not necessarily the issue described in the scenario. Finally, option D (exchange rate) refers to changes in the value of currency, which may affect businesses engaged in international trade, but that is not relevant to the information provided in the scenario.

Question 4

An)_____________ job includes forecasting,budgeting,cash flow analysis,cost control,taxes,and credit management.

Accepted Answer

Financial managers are responsible for forecasting, budgeting, cash flow analysis, cost control, taxes, and credit management. CPA's may be involved in some of these tasks, but their primary role is in auditing and accounting. Investment bankers and portfolio managers focus more on investment strategies and transactions.

Question 5

A _________ forecast predicts the revenues,costs,and expenses a firm will incur for a period longer than one year.

Accepted Answer

A long-term forecast is used to predict a firm's revenues, costs, and expenses for a period longer than one year, typically ranging from three to five years. This type of forecast is important for making strategic decisions such as capital expenditures, business expansions, and mergers and acquisitions.

Question 6

In order to assist in revenue realization,an)________ allocates resources throughout the firm.

Accepted Answer

A budget allocates resources by setting spending limits and priorities for different areas of the firm. By having a budget in place, the firm can make informed decisions about how to allocate resources in the most effective and efficient way, ultimately helping to increase revenue realization. A forecast is a prediction of future revenue or financial performance, but it does not allocate resources. The balance sheet and income statement are financial statements that provide information on a company's financial position and performance, but they do not directly allocate resources.

Question 7

When Preferred Pet Care Inc,a mobile veterinary care company,first started operations,it extended three months of credit to customers.It soon began to experience a cash flow problem.A finance professional was hired to:

Accepted Answer

Hiring a finance professional to manage accounts receivable can help address the cash flow problem by ensuring that customers pay their bills on time, reducing the amount of outstanding debt for the mobile veterinary care company. Managing accounts payable or developing tax strategies may be important functions for a finance professional, but they are not directly related to the cash flow problem experienced by the company. Auditing the company ledgers may be important for ensuring the accuracy of financial records, but it is not the best choice in this particular scenario where the company is experiencing a cash flow problem.

Question 8

The budget that estimates a firm's projected cash inflows and outflows,as well as cash shortages or surpluses during a given time period is called the ________ budget.

Accepted Answer

The budget that estimates a firm's projected cash inflows and outflows, as well as cash shortages or surpluses during a given time period is called the cash budget. This budget is important for managing a company's liquidity and ensuring that it has enough cash on hand to meet its obligations. The cash budget is different from the operating budget, which focuses on a company's projected income and expenses, and the capital budget, which is used to plan for long-term investments in assets like property, equipment, and technology.

Question 9

A _________ forecast predicts the future cash inflows and outflows in future periods.

Accepted Answer

A cash flow forecast is a financial statement that predicts the flow of cash in and out of a business. It helps businesses anticipate future cash flows and ensures that they have adequate funds to meet their financial obligations. The other options - money based, short-term, and long-term - do not specifically relate to predicting cash inflows and outflows.

Question 10

___________ refers to the process that identifies variances by comparing actual revenues and expenses to projected revenues and expenses.

Accepted Answer

Financial control refers to the process that identifies variances by comparing actual revenues and expenses to projected revenues and expenses. Factor analysis involves identifying underlying factors that contribute to variations in data. Forecasting involves making predictions about future events or conditions. Financial planning involves setting goals and developing strategies to achieve those goals.

Question 11

The overall objective of financial planning is to:

Accepted Answer

The overall objective of financial planning is to optimize the firm's profitability. While budgeting and financial statements are important components of financial planning, their ultimate purpose is to help the firm achieve maximum profitability. Forecasting technological trends may be a consideration in financial planning, but it is not the overall objective.

Question 12

Sarah intends to major in finance and find employment in corporate financial management.As a finance major,Sarah will discover her ________ knowledge to be valuable in mastering the objectives of her finance classes.

Accepted Answer

Accounting knowledge is most directly relevant to the field of finance, as financial management involves tasks such as budgeting, financial planning, and decision-making based on financial statements. Marketing, psychology, and sociology may be related to certain aspects of business, but are less directly applicable to finance.

Question 13

Which of the following activities is most likely to be performed by a financial manager?

Accepted Answer

Tax management often is an important part of a financial manager's job.

Question 14

The first step in the financial planning process is:

Accepted Answer

The first step in the financial planning process is to forecast financial needs, which involves estimating future expenses and revenues in order to plan for both short-term and long-term financial goals. Without a comprehensive understanding of financial needs, it is difficult to effectively prepare financial statements, develop budgets, or establish financial control.

Question 15

Which of the following shows a firm's spending plans on fixed assets such as large equipment?

Accepted Answer

A capital budget shows a firm's planned expenditures on fixed assets such as large equipment, buildings, or land. Operating budget shows a company's expected revenues and expenses over a specific period, usually a fiscal year. A cash budget shows a company's expected cash inflows and outflows over a specific period, such as a month or quarter. A surplus budget is a projected financial plan where revenues exceed expenses.

Question 16

Robert intends to major in business.He has never had much interest in subjects with numbers.He would like to avoid taking any finance courses if possible.Robert should:

Accepted Answer

While Robert may not enjoy courses involving numbers, a basic understanding of financial concepts is essential for success in the field of business. Avoiding finance courses entirely may limit his knowledge and opportunities in his future career. It is important for Robert to push himself to learn and understand financial concepts in order to excel in the business world.

Question 17

Susan started a cake decorating business that failed.She is convinced that she lacked the necessary funds to promote her business and get it off the ground.Susan experienced:

Accepted Answer

Undercapitalization refers to starting a business without sufficient funds or capital to support its operations and growth. Susan's belief that she lacked necessary funds suggests that she may have undercapitalized her business, leading to its failure. A, B, and D may also contribute to a failed business, but they do not specifically relate to Susan's situation as described.

Question 18

Which of the following companies is undercapitalized?

Accepted Answer

A company that is undercapitalized is one that has insufficient funds to meet its financial obligations. Based on the given options, the company that fits this description is the new company struggling because it has insufficient start-up funds.

Question 19

A _________ forecast predicts the revenues,costs,and expenses a firm will incur for a period of one year or less.

Accepted Answer

A short-term forecast predicts the financial activities of a company for a period of one year or less, including expenses, costs, and revenues. Near-horizon and tactical are not commonly used terms in finance, and capital expenditures are a specific type of investment in long-term assets.

Question 20

Ariel,a recent graduate in finance from a well-known university,was hired by a large corporation to work in tax management.Ariel's goal is:

Accepted Answer

As a tax manager, Ariel's main goal would be to minimize the firm's tax consequences. This involves developing strategies to legally minimize the amount of taxes the company has to pay, while still ensuring compliance with tax laws and regulations. Option A may be a part of Ariel's duties, but it is not her main goal. Option B would be unethical and illegal. Option D is not a responsibility of a tax manager.

Quiz 18: Financial Management

Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as an) :