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WorksheetsFINANCIAL MANAGEMENT
Total questions: 50
Worksheet time: 2hrs 13mins
A ______________ is a set of documents that outline the essential financial facts about the new venture.
financial forecast
budget
income statement
financial plan
___________________ represents the short-term liabilities that a business owes to creditors.
Owner's equity
Accounting equation
Accounts payable
Financial statement
The ___________________ is a report of the revenue, expenses, and net income or net loss over an accounting period.
income statement
accounts payable
owner's equity
financial statement
______________________are documents that summarize the changes resulting from business transactions that occur during an accounting period.
Income statements
Financial statements
Accounts payables
Current assets
Property is anything of value that is owned or controlled.
True
False
______________ are property and other items of value owned by a business.
Current assets
Fixed assets
Liabilities
Assets
The total amount of money owed to a business is known as, accounts receivable.
True
False
The systematic process of recording and reporting the financial position of a person or an organization is called, ______________.
Accounts receivable
Accounting
Generally accepted accounting principals (GAAP)
Fixed assets
The biggest accounting firms are known as the "Big Four." these include, PricewaterhouseCoopers, Deloitte Touche Tomatsu, Ernst & Young, and KPMG.
True
False
An _______________ is a review of accounting records and procedures.
income statement
financial statement
audit
statement of cash flows
Cash flows are the money that is available to a business at any given time.
True
False
A _____________________ is a report of the balances in all assets, liability, and owner's equity accounts at the end of a accounting period
statement of cash flows
balance sheet
income statement
financial statement
Owner's equity is the owner's claim to the asset of the business. It is NEVER referred to as the owner's capital in the business.
True
False
ASSETS = LIABILITIES + OWNER'S EQUITY is known as the, ____________.
accounts payable
accounting equation
financial statements
income statement
_____________________ are the creditors' claims to the assets of a business.
Liabilities
Owner's equity
Equity
Assets
Current assets are the assets that are either used up or converted to cash during the normal cycle of business.
True
False
________________________ is the total amount of money owed to a business
Accounts payable
Accounts receivable
Fixed assets
Equity
Fixed assets are items of value that will be held for more than one year.
True
False
A ___________________ is a plan specifying how money will be used or spent during a particular period.
financial forecast
financial plan
accounting equation
budget
A _______________________ is an estimate of a business's financial outlook for the few years.
financial plan
financial forecast
budget
income statement
______________ is money supplied by investors, banks, or owners of a business.
Equity
Capital
Income statement
Property
The income statement is sometimes called a profit and loss statement.
True
False
_____________ is the present value of an asset less all claims against it.
Capital
Property
Equity
Asset
The _______________________ is a financial report that shows incoming and outgoing money during an accounting period (often a month, quarter, or year).
financial forecast
financial plan
statement of cash flows
income statement
Jackson spends in gas changes every month, based upon the price of gas, this is an example of which of the following:
Fixed Expense
Variable Expense
Periodic Expense
A ____________ would be an example of a principal, while a ___________ would be an example of an agent, in agency theory.
shareholder and manager
shareholder and bondhodlers
manager and employee
None of the above
Project is accepted when:
Net present value is greater than zero
Internal Rate of Return will be greater than cost of capital
Profitability index will be greater than unity
Any of the above
Criteria that measures how quickly project will return its original investment is?
Accounting rate of return
Payback period
Internal rate of return
Benefit cost ratio
Decision criterion with respect to profitability index to accept project is?
Profitability index is equal to or less than 1
Profitability index is greater than 1
Profitability index is greater than or equal to 1
Profitability index is less than 1
Working capital management consist of cash management, receivable management, short term financing decision and
Fixed asset management
Total asset management
Inventory management
Equity management
Discounting formula
FV = PV (1+i)n
PV = FV / (1+i)n
EAR = (i/m.n)-1
FVa={1-(1/(1+i)n)}/i
Managerial finance
involves tasks such as budgeting, financial forecasting, cash management, and funds procurement.
involves the design and delivery of advice and financial products.
recognizes funds on an accrual basis.
All of the above
Which of the following would be considered an advantage of the SOLE PROPRIETORSHIP form of business organization?
unlimited life
wide access to capital
income taxed at only one level
pooled expertise
The __________ function focuses on raising capital to support a company's operations and investment programs.
financing
capital budgeting
corporate governance
risk management
Long-term debt instruments used by both government and business are known as
bonds
equities
stocks
bills
The major securities traded in the capital markets are ____.
stocks and bonds
bonds and commercial paper.
commercial paper and Treasury bills
Treasury bills and certificates of deposit
which is not in assets
Money
Printer
Note payable
Note receivable
What is the value of the firm usually based on?
The value of debt and equity.
The value of equity.
The value of debt.
The value of assets plus liabilities
Which of the following would not be financed from working capital?
Accounts receivable.
Cash float.
Credit sales.
A new personal computer for the office.
which are not goal of financial management?
maximize share price
minimize firm value
maximize share holder wealth
A and b
-------means current value of a future amount of money evaluated at a given interest rate?
compounding
discounting
continuous rate
Nominal rate
Which of the following best describes why the Valuation Principle is a key concept in making financial decisions?
It shows how to assign monetary value to intangibles such as good health and well-being.
It allows fixed assets and liquid assets to be valued correctly.
It gives a good indication of the net worth of a person, item, or company and can be used to estimate any changes in that net worth.
It shows how to make the costs and benefits of a decision comparable so that we can weigh them properly.
What is the major advantage corporations have over other business entities?
It is easier for a corporation to raise capital than other forms of businesses.
A corporation is treated as a separate legal entity for tax and legal purposes.
A corporation's shares can be freely traded among its shareholders.
All of the above are advantages that a corporation has over other business forms.
The relative proportion of debt, equity, and other securities that a firm has outstanding constitute its ________.
asset ratio
current ratio
capital structure
retained earnings
For an unlevered firm, the cost of capital can be determined by using the ________.
yield on the traded debt
Capital Asset Pricing Model
dividend yield
preferred stock yield
The after-tax cost of debt ________ the before-tax cost of debt for a firm that has a positive marginal tax rate.
is always greater than
is always equal to
is always less than
may be greater than or less than
A stakeholder is:
A. any person who has voting rights and receive dividends based on stock ownership of a corporation.
B. a person who initially founded a firm and currently has management control over that firm.
C. a creditor to whom a firm currently owes money.
D. none of the above.
financial manger tries to identify investment opportunities that work more to the firm then the cost to acquire it
working capital Mangment
capital Budgeting decision
agency cost
capital structure design
which are not goal of financial management?
maximize share price
minimize firm value
maximize share holder wealth
A and b
What is the major advantage corporations have over other business entities?
It is easier for a corporation to raise capital than other forms of businesses.
A corporation is treated as a separate legal entity for tax and legal purposes.
A corporation's shares can be freely traded among its shareholders.
All of the above are advantages that a corporation has over other business forms.
