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2nd Year - 1st Sem (Prelims) > Bridging Prelims > Flashcards

Bridging Prelims Flashcards

1
Q

Primary objectives of FM

A
  1. reduce finance cost
  2. ensure the availability of funds
  3. plan, organize, and control financial activities (Procurement, utilization of funds)
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2
Q

Who do we need to manage finances efficiently?

A

Wants are unlimited but our resources are limited.

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3
Q

FM is the activity concerned with planning, raising, controlling, and administering of funds used in the business

A

Guthman and Dougal

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4
Q

FM is that area of BM devoted to a judicious use of capital

A

J.F. Brandley

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5
Q

FM is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds for efficient operations

A

Massie

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6
Q

Why do organizations need finance?

A

Finance is used to obtain physical resources as well as carry out the production activities and business operations

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7
Q

Theories of FM

A
  1. Providing funds (Procurement of funds)
  2. Finance is all about cash
  3. Procurement of funds and their effective utilization
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8
Q

Scope of FM

A
  1. Financial Decision
  2. Investment Decision
  3. Dividend Decision
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9
Q

What is investment decision?

A

managers need to decide on the amount of investment available out of existing finance

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10
Q

Committing funds for a long period of time. These are decisions that are irreversible.

A

Long-term investment decision or capital budgeting

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11
Q

committing funds for short period of time. They directly affect the liquidity and performance of the busines

A

short-term investment decision or working capital management.

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12
Q

What does Financing Decision mean?

A

decision pertaining to raising finance from long-term sources and short-term sources.

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13
Q

Pre-estimating financial needs of an organization to ensure the availability of adequate finance

A

Financial Planning Decision

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14
Q

Identifying sources of funds as well as involve decisions with respect to external sources or internal sources for raising funds.

A

Capital Structure Decision

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15
Q

Decisions related to the portion of profits that will be distributed as dividend

A

dividend decisions

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16
Q

Financial Services

A

Banking
Personal Financial Planning
Investment
Real Estate
Financial Planning

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17
Q

is the process of developing a personal roadmap for your financial well being.

A

Personal FInancial Planning

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18
Q

an ongoing process that looks at your entire financial picture in order to create strategies for achieving your short and long term goals.

A

Investment

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19
Q

is a branch of finance that focuses on how people purchase real estate, whether that be a home, an office building, or a plot of land.

A

Real Estate

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20
Q

refers to a comprehensive plan of your long term or short term objectives for financial security

A

financial planning

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21
Q

Components of Managerial FInance

A

Financial Analyst
Capital Budgeting Analyst
Cash Manager

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22
Q

works in banks, pension funds, insurance companies, and other businesses. they guide businesses and individuals in decisions about expending money to aattain profit

A

Financial Analyst

23
Q

Summarizes budgets and offer insight regarding funds request. Review budget proposals for completeness, accuracy, and compliance.

A

Capital Budgeting Analyst

24
Q

professional who handles the financial transactions of an organization or client. they monitor and evaluate spending, earnings, risk and oss and works to maximize profits.

A

Cash Manager

25
Q

is a graduate level course of study which is focused largely on the investment side of finance

A

Chartered Financial Analyst

26
Q

this program requires students to pass a single exam that assesses knowledge and skills needed in working for a corporate treasury dept.

A

Certified Treasury Professional (CTP)

27
Q

students should pass 10-hour exam covering wide range of topics related to personal financial planning

A

Certified Financial Planner

28
Q

this administers certification programs for financial professionals in a wide range of fields.

A

American Academy of Financial Management

29
Q

Types of Professional Certifications in Accounting

A

Certified Public Accountant
Certified Management Accountant
Certified Internal Auditor

30
Q

Legal forms of Bus Orgs

A

Sole Proprietorship
Partnership
Corporation

31
Q

business owned by one person and operated for one’s own profit

A

sole proprietorship

32
Q

advantage and disadvantage of sole prop

A

ad: freedom to make all decisions and enjoy profit
dis: lack of expertise in running the busines

33
Q

business owned by two or more people and operated for profit

A

Partnership

34
Q

partnership is based on an agreement called _____

A

Article of Co-Partnership

35
Q

advantage and disadvantage of partnership

A

ad: shared talents, brain power, and managerial skills.
dis: dissolved when partner withdraws or dies.

36
Q

is an entity created by law. they have the legal power of an individual in that it can sue and be sued, make and be party to contracts, and acquire property in its own name.

A

corporation

37
Q

advantage and disadvantage of corporation

A

ad: ease of transferring ownership
dis: bound by more government regulations

38
Q

it is a social science that deals with individual or collective economic activities such as production, consumption, distribution, and transfer of money and wealth.

A

Economics

39
Q

is the study of financial allocation that can provide insights on where to put one’s money and why it is necessary

A

Finance

40
Q

differences between accounting and finance

A

accountants use accrual method while finance use cash flows

41
Q

__________ recognizes revenue at the point of sale and consider expenses when incurred, regardless of the direction of cash flow in the firm

A

Accountant/Accounting

42
Q

focuses on actual inflows and outflows of cash, recognizing revenues when cash is collected and considering expenses when actually paid.

A

Financial Manager/ FInance

43
Q

Decision Rule for Managers

A

only take actions that are expected to increase the share price

44
Q

Profit maximization may not lead to the highest possible share price due to? 3 reasons

A
  1. timing is important
  2. profits do not necessarily result in cash flows available to stockholders
  3. profit maximization fails to account for risk
45
Q

2 key activities that Financial Manger does

A
  1. Investment decision - define most efficient level and best structure of assets
  2. Financing Decisions - proper combi of shot and long term financing
46
Q

Concerned with the design and delivery of advice and financial products to individuals, businesses and governments.

A

FINANCIAL SERVICE

47
Q

Concerned with the duties of a Financial Manager
working in a business. This encompasses financial
planning or budgeting, credit extensions to customers or
other credit admin function, investment evaluation and
analysis, and obtaining of funds acquisition for a firm.

A

MANAGERIAL FINANCE

48
Q

is a system rules, practices and processes by which a
company is directed and controlled. defines and establishes the responsibility and accountability of the major participants in an organizations

A

Corporate Governance

49
Q

MAJOR PARTICIPANTS IN AN
ORGANIZATION

A

Shareholders
Board of Directors
Managers
Officers of Corporation

50
Q

refers to implementing appropriate business policies and practices with regard to
arguably controversial subjects.

The standards of conduct or moral judgement that
apply to persons engaged in industry or commerce.

A

Business Ethics

51
Q

What is the purpose of ethics program in firms?

A

seek to reduce lawsuits and judgement costs

52
Q

What results to agency problems and issues?

A

When managers deviate from the goal of maximization of shareholder wealth
by putting their personal goals above the goals of shareholders.

53
Q

AGENCY PROBLEM AND ASSOCIATED AGENCY COST CAN BE REDUCED
THROUGH THE FOLLOWING:

A
  1. Properly constructed and implemented corporate governance structure - through checks and balances
  2. structure expenditures through compensation plans - incentive or performance plans
  3. Market Forces Such As Shareholder Crusading From
    Large Institutional Investors
  4. Threat of Hostile Takeovers

2nd Year - 1st Sem (Prelims) (11 decks)

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