Question 1

An internal auditor is responsible for paying the company's bills and collecting overdue payments from customers.

Accepted Answer

An internal auditor is not responsible for paying the company's bills and collecting overdue payments from customers. These are typically the responsibilities of accounts payable and accounts receivable departments, respectively. The primary function of an internal auditor is to analyze and evaluate the effectiveness of the company's internal controls, policies, and procedures to ensure compliance with laws and regulations, and to identify potential areas for improvement.

Question 2

Accountants truly represent the financial managers of a business.

Accepted Answer

Accountants perform the technical aspects of gathering, organizing, classifying, and summarizing events and transactions, and prepare technical documents such as financial statements and reports. Finance managers interpret the results of these reports and create financial strategy for the firm.

Question 3

Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

Accepted Answer

A firm can use internal auditors to evaluate whether the firm is in compliance with generally accepted accounting principles (GAAP).

Question 4

The long-term financial forecast plays a crucial part in the company's long-term strategic plan.

Accepted Answer

The long-term financial forecast helps in making informed decisions related to the company's growth, expansion, and financial stability, which are all part of the long-term strategic plan.

Question 5

Financial managers are responsible for buying merchandise on credit and collecting payment from accounts receivable.

Accepted Answer

The answer of Financial managers are responsible for buying merchandise...

Question 6

The first step in financial planning is to develop a budget to better control costs.

Accepted Answer

The first step in financial planning is typically to set clear, achievable goals. Developing a budget comes afterwards to help in achieving those goals by controlling costs.

Question 7

Financial managers are responsible for the management of accounts receivable and accounts payable.

Accepted Answer

Financial managers have the responsibility of managing both accounts receivable (money owed to the company by its clients) and accounts payable (money owed by the company to its vendors/suppliers).

Question 8

Inadequate expense control typically occurs as a result of undercapitalization.

Accepted Answer

Undercapitalization refers to a problem many beginning business ventures have-insufficient start-up funds. Expense control problems can occur even in firms that do not start out undercapitalized, and is an area of concern to all businesses, not just new firms. Constant attention is needed to ensure expenses increase only when necessary.

Question 9

As a financial manager, Sabrina's responsibilities include the interpretation of financial statements provided by the firm's accountants and the preparation of recommendations to top management.

Accepted Answer

This statement accurately describes the responsibilities of a financial manager.

Question 10

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Accepted Answer

The overall objective of financial planning is to optimize the firm's profitability by making informed financial decisions and allocating resources appropriately. This includes managing expenses, identifying new investment opportunities, and ensuring a steady cash flow. By doing so, the firm can make the best use of its money and achieve its long-term financial goals.

Question 11

Mark manages credit and collections at Polly Parrot Pet Supplies, Inc. He is responsible for accounts receivable and accounts payable. These activities suggest that his job is in financial management.

Accepted Answer

Mark's responsibilities of managing accounts receivable and accounts payable are both related to the financial management of the company.

Question 12

The primary focus of a cash flow forecast is the firm's revenue and costs for the current operating period.

Accepted Answer

A cash flow forecast primarily focuses on the inflows and outflows of cash within a business, including all sources of income and expenses, not just revenue and costs from operations. It aims to predict the company's cash position over a future period, considering all cash movements, not just those from current operations.

Question 13

According to the "Spotlight on Small Business" box in Chapter 18, small business owner, James "Hoss" Boyd knows all too well about potential financial failure. Of the three common reasons for financial failure, only one, his inability to control his own costs is keeping his business on the brink of failure.

Accepted Answer

The answer of According to the "Spotlight on Small Business"...

Question 14

The importance of financial managers to firms with large cash inflows is greater than for firms with smaller cash flows.

Accepted Answer

Finance professionals are greatly needed in small firms. Small and medium-sized firms have smaller cash or credit cushions than large firms, which increases the need for monitoring cash flows.

Question 15

A firm's most recent financial statements often serve as the basis for predicting future sales, costs and expenses.

Accepted Answer

A firm's financial statements provide valuable information about its past performance, which can be used to make predictions about its future sales, costs, and expenses. Factors such as industry trends, economic conditions, and competitor behavior may also be considered when making these predictions. However, it is important to note that past performance is not always a reliable indicator of future results, and other factors may also impact a firm's future performance.

Question 16

Several big firms got into financial trouble in 2008. The problems were not isolated to just a few industries. It stretched from financial services companies to the U.S. auto makers. The government proceeded with a number of bailouts.

Accepted Answer

This statement is true as the financial crisis of 2008 affected numerous industries, including the financial services sector and the U.S. auto industry, leading to multiple government bailouts.

Question 17

Is there something in a name? April Gardner was told that she would grow-up to be a "master gardener". She didn't really believe that stuff, but now she finds herself in charge at a large city-owned botanical garden. She is requiring her staff to pursue continuing education. To put her money where her mouth is, she will enroll in a couple of accounting and finance courses at the local community college because this is an area where she is weak. This is a good plan - especially since she is the boss.

Accepted Answer

The passage supports the idea that April Gardner's name may have influenced her career path and that she is taking steps to improve her knowledge and skills in areas where she is weak.

Question 18

Organizations can avoid financial difficulties by marketing products that generate a significant rate of growth in sales revenue.

Accepted Answer

The answer of Organizations can avoid financial difficulties by marketing...

Question 19

One step in the financial planning process is to establish control procedures that allow managers to monitor the organization's performance.

Accepted Answer

Establishing control procedures is an important step in the financial planning process to ensure that managers can monitor and evaluate the organization's performance. This helps them identify any deviations from the planned goals and take corrective measures to achieve the desired results.

Question 20

A firm's short-term financial forecast provides a projected sales estimate.

Accepted Answer

A firm's short-term financial forecast typically includes projected sales estimates for a specific period of time, such as the next quarter or year. This estimate serves as a basis for developing other aspects of the financial forecast, such as cash flow, expenses, and profits.

Quiz 18: Financial Management