Lesson 1

Question 1

(T/F) Finance is the science and art of managing money and is concerned with individual’s decisions about how much of their earnings they spend, how match the save, and how they invest their savings.

Answer 1

T

Question 2

(T/F) Managerial finance is the area of finance concerned with the design and delivery of ADVICE and financial products to individuals businesses and governments.

Answer 2

(F)
* Financial Services

Question 3

Two Career Opportunities in Finance.
A.) Financial Services & Managerial finance
B.) Financial Services & Managerial Services
C.) Financial finance & Managerial finance
D.) Financial finance & Managerial Services

Answer 3

A.) Financial Services & Managerial finance

Question 4

(T/F) Managerial finance is concerned with the DUTIES of the financial MANAGER working in a business.

Answer 4

T

Question 5

Prepares the firm’s financial PLAN and budgets.

A.) Credit analyst/manager
B.) Cash manager
C.) Financial analyst
D.) Capital expenditures manager

Answer 5

C.) Financial analyst

Question 6

Evaluates and recommends proposed long-term investments. May be involved in the financial aspects of IMPLEMENTING approved investments.

A.) Cash manager
B.) Financial analyst
C.) Capital expenditures manager
D.) Credit analyst/manager

Answer 6

C.) Capital expenditures manager

Question 7

Manages specific FOREIGN operations and the firm’s exposure to fluctuations in exchange rates.

A.) Foreign exchange manager
B.) Pension fund manager
C.) Credit analyst or manager
D.) Cash manager

Answer 7

A.) Foreign exchange manager

Question 8

The one who checks if creditors are qualified.

A.) Credit manager
B.) Credit analyst
C.) Cash manager
D.) Financial analyst

Answer 8

A/B - Credit analyst / manager

Question 9

The one who maintains and controls the firm’s daily cash balances.

A.) Capital expenditures manager
B.) Cash manager
C.) Project finance manager
D.) None of the above

Answer 9

B.) Cash manager

Question 10

A business owned by one person and operated for his or her own profit.

Answer 10

Sole proprietorship

Question 11

An entity created by law.

Answer 11

Corporation

Question 12

A business owned by two or more people and operated for profit.

Answer 12

Partnership

Question 13

It is the condition a sole proprietorship or general partnership, giving creditors the right to make claims against the owner’s personal assets to recover debts owed by the business

Answer 13

Unlimited Liability

Question 14

It is a written contract used to formally establish a business partnership.

Answer 14

Articles of partnership

Question 15

A corporate official that is responsible for managing the firm’s day-to-day operations and carrying out the policies established by the BOD.

Answer 15

President or CEO

Question 16

Periodic distributions of cash to the stockholders of a firm.

Answer 16

Dividends

Question 17

The owners of a corporation

Answer 17

Stockholders

Question 18

A legal provision that limit stockholders liability for a corporations depth to the amount they initially invested in the film by purchasing stock.

Answer 18

Limited liability

Question 19

The purest and most basic form of corporate ownership.

Answer 19

Common stock

Question 20

Group elected by the firm stockholders and typically responsible for approving strategic goals and plans, setting general policy, guiding corporate affairs, and approving major expenditures.

Answer 20

Board of directors (BOD)

Question 21

What are the two managers under the Vice President of Finance or CFO?

Answer 21

Treasurer and Controller

Question 22

An autonomous and duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end.

Answer 22

Cooperative

Question 23

Four legal forms of business organization.

Answer 23

Sole proprietorship, partnership, corporation, and cooperative

Question 24

Form of legal business organization where in the owner receives all the profit and sustains all losses

Answer 24

Sole proprietorship

Question 25

Legal form of business organization where they can raise more funds than sole proprietorships. They borrow power enhanced by more owners.

Answer 25

Partnership

Question 26

A legal form of business organization where the owners have limited liability which guarantees that they cannot lose more than they invested. They can achieve large size by a single of ownership or stock and has a long life of firm. They also has better access to financing.

Answer 26

Corporation

Question 27

The owner/s of this legal form of business organization has unlimited liability.

Answer 27

Sole proprietorship and partnership

Question 28

A legal form of business organization wherein it is the most expensive to organize and has greater government regulations and requires financial results.

Answer 28

Corporation

Question 29

What is the goal of the firm?

Answer 29

The goal of the firm and of the managers is to maximize the WEALTH of the owners for whom it is being operated which in most instances is equivalent to maximizing the STOCK PRICE

Question 30

It is the chance that actual outcomes may differ from those expected.

Answer 30

Risk

Question 31

It requires compensation to bear risk

Answer 31

Risk Averse

Question 32

It is the amount earned during the period on behalf of each outstanding share of common stock calculated by dividing the periods total earnings available for the firm’s common stockholders by the number of shares of common stock outstanding.

Answer 32

Earnings per Share (EPS)

Question 33

Groups such as employees, customers, suppliers, creditors, owners, and others who have a direct economic linked to the firm

Answer 33

Stakeholders

Question 34

The firm’s chief accountant is responsible for the firm’s accounting activities, such as corporate accounting, tax management, financial accounting, and cost accounting.

Answer 34

Controller

Question 35

The firm’s chief financial manager, who manages the firm’s cash overseas expansion plans, and manages key risks.

Answer 35

Treasurer

Question 36

Under the treasurer, it is the manager of responsible for managing and monitoring the firm’s exposure to loss from CURRENCY fluctuations.

Answer 36

Foreign exchange manager

Question 37

What is the relationship of finance to economics?

Answer 37

And be alert to the consequences of variety levels of economic activity and changes in economic policy they must also be able to use economic theories as guidelines for efficient business operations such as the supply and demand analysis, profit maximization, and price theory.

Question 38

What is the relationship of finance to accounting?

Answer 38

In small firms, accountants often carry out the finance function; however in large firms, financial analyst often help compile accounting information there are however two differences between finance and accounting One is related to the emphasis on cash flows and the other is related to decision making.