Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business, Technology & Finance > Chapter 7 - The business's finance function > Flashcards

Chapter 7 - The business's finance function Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 79 Top-Off Exam flashcards Series 63 flashcards Series 66 flashcards CFA flashcards SIE Exam flashcards Series 7 Top-off Exam flashcards Series 65 flashcards
1
Q

What is the role of recording financial transactions in the finance function?

A

ensuring an accurate record of its revenue, expenses, assets, liabilities and capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the 2 dilemmas of business partnering?

A
  • a compromise of objectivity and independence
  • a lack of time (divert their time to tasks they feel more comfortable with)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the structure of the finance function?

A

Centralized finance function

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the advantage of a centralized finance function?

A

helpful with the overall management of cash and external reporting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the disadvantages of centralized finance functions?

A
  • Not helpful with respect to making sure that local operational management get all the information and support they need (internal reporting)
  • More problematic when the business operates in global markets (exchange rates and time differences)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the factors affecting the finance function?

A
  • Business structure
  • Organizational structure, size and geographical dispersion
  • Markets
  • Technology
  • History and Ownership
  • Its culture
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Name out types of performance measure

A
  • Qualitative measure
  • Quantitative measure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the characteristic of qualitative measures?

A

subjective and judgmental, and are not expressed in numerical terms​

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the characteristic of quantitative measures?

A

objective and based on data that must be reliable. They are expressed in numerical terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the forms of quantitative measures?

A
  • Financial measures
  • Non-financial measures
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the 3 points of reference for quantitative measurement?

A
  • Profitability
  • Activity
  • Productivity
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the profitability reference measure?

A

cost and revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the activity reference measure?

A
  • number of orders
  • number of machine breakdown
    (physical numbers, monetary value. time spent)
    => cause costs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the productivity reference measure?

A

the quantity of the service or product produced in relation to the resources put in.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How to measure profitability?

A

absolute terms (profit) = revenue - cost
relative terms (profit margin) = (revenue - cost)/ revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If profit is to be the business’s primary objective, it must be specified in _______. Effectively, this rate can only be determined by examining the ___________ of investing in the business

A
  • quantified terms (specific target rate of profit)
  • opportunity cost (the rate of profit available on alternative investments with similar characteristics)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the 3 criteria to measure resource use?

A
  • Effectiveness
  • Economy
  • Efficiency
18
Q

What is the economy considered in terms of resource use?

A

the reduction or containment of cost and can be measured against the target

19
Q

What is the effectiveness considered in terms of resource use?

A

the measure of achievement and is assessed by reference to objectives

20
Q

What is the efficiency considered in terms of resource use?

A

being effective at minimum cost or controlling costs without losing operational effectiveness

21
Q

Efficiency is a _____________ effectiveness and economy

A

combination

22
Q

How to assess whether the objectives of strategic business units (SBUs) or the whole business are being met?

A
  • Productively: what is output relative to what is input?​
  • Effectively: how far are targets and objectives achieved?​
  • Efficiently: what is the gain that the business has achieved?
23
Q

What is the concern of critical success factors (CSFs)?

A

concern not only the resources of the business but also the competitive environment in which it operates.

24
Q

Once the business has identified its CSFs and the things it must be good at to succeed, it must identify ____________

A

key performance indicators (KPIs)

25
Q

What is key performance indicators (KPIs)?

A

A measure of the level of performance in an area where a target level must be achieved for the business to outperform rivals and achieve competitive advantage.

26
Q

What is benchmarking?

A

the way of deciding on which KPIs to measure and what targets to set for them

27
Q

What are the 4 specific tasks of the finance function?

A
  1. recording financial transactions
  2. management accounting
  3. financial reporting
  4. treasury management
28
Q

What is the role of financial reporting in the finance function?

A

Providing information about a business to external users that is useful to them in making decisions and for assessing the stewardship of the business’s management.

29
Q

What is the role of management accounting in the finance function?

A

Providing information to help managers and other internal users in their decision-making, performance measurement, planning, and control activities.

30
Q

What is the role of treasury management in the finance function?

A

Managing the funds of a business (eg: cash and other working capital items, plus long-term investments, short-term and long-term debt, and equity finance)

31
Q

What is the stewardship theory?

A

a framework which argues that people are intrinsically motivated to work for others or for organizations to accomplish the tasks and responsibilities with which they have been entrusted.

32
Q

What is a steward?

A

one who takes on the responsibility of caring for something on behalf of another person or group of people, eg: directors, managers

33
Q

What is business partnering?

A

the finance function working alongside other business functions rather than being a separate function on their own.

34
Q

What is the main role of business partnering?

A

Providing advice and support to the other areas of the business

35
Q

What are other roles of business partnering?

A
  • strategy formulation, implementation & communication
  • commercial decision-making and negotiations - business analysis
  • sounding board
  • trusted adviser
  • critical friend and facilitator.
36
Q

What is the role of the accountant in measuring sustainability and natural capital?

A
  • Responding to uncertainty and risk​
  • Developing existing and new markets​
  • Innovating processes, products, and services that can provide benefits to society​
  • Improving operational efficiency and lowering costs by way of sustainable operations​
  • Engaging employees, customers, and suppliers in the drive toward sustainability
37
Q

Name some measure for sustainability and natural capital

A
  • SEE (social, environment, economic)
  • GRI
38
Q

What are some limitations of financial measures?

A
  • Information problems: out-of-date, historical data, summarized information, symptoms
  • Comparison problems: trends & different business
39
Q

What is the balanced scorecard?

A

An integrated set of performance measures linked to the achievement of strategic objectives. ​

40
Q

What are the 4 important perspectives on the balanced scorecard?

A
  • Customer: how do customers see us?
    eg: satisfaction ratings, returns rate, retention rate
  • Internal business processes: what we must excel at?
    eg: product quality, failure rates
  • Innovation and learning: how we can continue to improve and create value?
    eg: employee retention rates, time to market for new products
  • Financial: how do we look in our stakeholders
    eg: gross margin, net margin, interest cover…
41
Q

What is internal control?

A

A process, effected by an entity’s BOD, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.​

42
Q

According to COSO, what are the 5 components of effective internal control?

A
  • Control environment
  • Risk assessment
  • Control activities
  • Information and communication
  • Monitoring activities

Business, Technology & Finance (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions