Business Management 512 - Topic 1

1. What are the three core components of financial management?

• a) Planning, Organizing, Controlling

• b) Financing, Investment, Administration

• c) Assets, Liabilities, Equity

• d) Revenue, Expenses, Profit

2. According to the Time Value of Money principle, R100 today is worth:

• a) Less than R100 in one year

• b) More than R100 in one year

• c) Exactly R100 in one year

• d) It depends on inflation only

3. Which ratio measures a company's ability to meet short-term obligations?

• • a) Debt ratio

• • b) Gearing ratio

• c) Current ratio

• • d) Return on capital

4. The break-even point formula is:

• a) Fixed Costs ÷ Variable Costs

• b) Fixed Costs ÷ (Selling Price - Variable Cost per Unit)

• c) Total Revenue - Total Costs

• d) Fixed Costs × Variable Costs

5. Which of the following is NOT a fixed cost?

• a) Rent

• b) Insurance

• c) Raw materials

• d) Depreciation

6. The Acid Test Ratio formula is:

• a) Current Assets ÷ Current Liabilities

• b) (Current Assets - Inventory) ÷ Current Liabilities

• c) Total Debt ÷ Total Assets

• d) Owners' Equity ÷ Debt

7. What is the future value of R1,000 invested for 2 years at 10% per annum?

• a) R1,100

• b) R1,200

• c) R1,210

• d) R1,220

8. Which financial statement shows the financial position at a specific point in time?

• a) Income Statement

• b) Balance Sheet

• c) Cash Flow Statement

• d) Budget Statement

9. The accounting equation states: Assets = Liabilities + Owners' Equity

• True

• False

10. Variable costs remain unchanged regardless of production volume.

• True

• False