The role of financial management

What are the primary roles of a financial manager?

• Managing investments

• Overseeing cash flow

• Reporting financial performance

• All of the above

What is the main difference between financial accounting and management accounting?

• Financial accounting is for internal users, while management accounting is for external users

• Financial accounting is for external users, while management accounting is for internal users

• Both are the same

• None of the above

Which type of business organization involves unlimited liability for its owners?

• Sole Proprietorship

• Partnership

• Limited Liability Company

• Corporation

Which qualitative characteristic ensures that accounting information can be checked and verified by independent experts?

• Comparability

• Relevance

• Verifiability

• Understandability

In the context of agency theory, who are considered the ‘agents’?

• Shareholders

• Managers

• Board of Directors

• Auditors

What is the primary focus of finance compared to accounting?

• Past transactions

• Future transactions and cash flows

• Regulatory compliance

• Tax reporting

Which type of market is responsible for the trading of previously issued securities among investors?

• Primary Market

• Secondary Market

• Money Market

• Capital Market

What is ‘double taxation’ in the context of corporations?

• When both the company and its shareholders pay taxes on income

• When a company pays taxes in two different countries

• When a company pays taxes on income and dividends

• When a company pays taxes on profits and capital gains

Which of the following is an example of reducing agency conflict?

• Allowing managers full autonomy

• Introducing stock options as part of compensation

• Removing external audits

• Reducing shareholder rights

Which of the following is a primary financial decision made by financial managers?

• Deciding employee salaries

• Capital budgeting

• Marketing strategy

• Product design