Deck 9: Financial Management

Question 1

Credit cards and online banking

A)are not favored by small business of the bank charges
B)surpass the use of cash and cheques in Canada
C)depend on the belief that cash on hand is at high risk for in store robbery and theft
D)are universally used by consumers of all ages

Answer 1

B

Question 2

Variance analysis refer to

A)calculations of the extent of different kinds of activities
B)degrees of tolerance limits in manufacturing
C)an investigation of differences between budget and actual numbers
D)understanding how a business's performance differs from its competitors

Answer 2

C

Question 3

Rate-of-return measures

A)how quickly first time customers return to a store and make a second purchase
B)the financial soundness of a capital investment decision
C)sales returns and allowances experience
D)poor credit experience indicated by returned (bounced)cheques from credit customers

Answer 3

B

Question 4

Balance sheet items are generally listed in order of

A)quantum
B)age
C)frequency of the underlying transactions
D)liquidity

Question 5

Payback method measures

A)the frequency with which a supplier reimburses a business for increasing its purchases of merchandise
B)how quickly a business repays bank financing
C)speed of repayment of a small business's founders original cash investment
D)the number of years it takes for a capital investment to pay for itself

Question 6

Inventory turnover refers to

A)the need to replace old inventory with fresh product
B)the frequency with which new models are brought to market
C)number of times inventory is sold in a year
D)customer handling of merchandise on display frequency in a retail operation

Question 7

The break-even point is when

A)sales dollars equal the total of fixed and variable costs
B)is the point at which all existing customer demands have been satisfied
C)total costs do not exceed the sum of borrowed and invested capital
D)total sales match the total sales of a business's major competitor

Question 8

Financial ratios are

A)helpful for isolating and analyzing weaknesses in a business
B)used to define management responsibilities
C)usually not meaningful because businesses differ from one another
D)mostly used by lenders

Question 9

When using a service bureau

A)a small business can avoid being involved in bookkeeping
B)a small business relies on the service bureau for the entire accounting cycle
C)a small business still needs to perform bookkeeping functions itself
D)a small business doesn't need to understand accounting

Question 10

Credit bureaus are used to

A)evaluate customers before granting them credit
B)obtain borrowed funds
C)build a new business's reputation
D)justify bank borrowing

Question 11

Which of the following best describes accounting systems?

A)small business use several different types of accounting systems
B)most accounting systems are appropriate for many different sizes of business
C)affordability is the most important factor in choosing an accounting system
D)numbers of transactions are not a relevant factor when choosing a computer based accounting system

Question 12

An income statement can show a profit

A)as long as sales prices are greater than cost to produce
B)even though a business's cash position may have deteriorated
C)if selling prices remain competitive
D)in times of increasing demand

Question 13

A credit collection policy is likely to include

A)forced jail time if debts are not paid
B)physical intimidation after customer refusals to pay
C)various actions to be taken after a debt has been outstanding for 30,45,60,75 or 90 days
D)public announcements which identify the customer who has refused to pay their debt

Question 14

The accounting cycle consist of

A)recording - classifying - summarizing
B)sale - collection - banking
C)purchasing - presenting - selling
D)investing - selling - collecting

Question 15

A ledger is a(n)

A)book that records customer contacts
B)running balance of accounts
C)accounting record of banking transactions
D)record of salaries and wages paid to employees

Question 16

One key advantage of offering credit is

A)it is a socially responsible to operate a business
B)interest on overdue accounts is a major source of income
C)it creates sales volume which can then be used to borrow more funds from a bank
D)results in increased sales

Question 17

Which of the following best describes the use of manual accounting systems in Canada today?

A)all small businesses use manual accounting systems
B)very few small businesses use manual accounting systems
C)small retail businesses with less than ten employees use manual accounting systems
D)nearly one million small businesses use manual accounting systems

Question 18

A statement of changes in financial position

A)is the same as a cash flow statement
B)presents the extent to which sales changed from the previous fiscal period
C)presents changes in balance sheet accounts from one period to the next
D)summarizes a business's changes in its market position

Question 19

Outsourcing financial activities

A)is dangerous because of loss of control
B)can be less costly than doing it in-house
C)is rarely satisfactory
D)often is found to be too expensive for small businesses

Question 20

Productivity ratios measure

A)total manufacturing output
B)quality of life
C)employee satisfaction
D)efficiency