PPT 3

Question 1

It refers to the word used to describe the money resources available to governments, firms, or individuals, and the management of these resources.

Answer 1

Finance

Question 2

This is the acquisition, management, and financing of resources by means of money, with due regard for prices in external markets.

Answer 2

Financial Management

Question 3

The main feature of ________ is the formulation of the firm’s strategy towards determining the efficient use of funds currently at the disposal of the firm, and selecting the most favorable sources of additional funds that the firm will need in the foreseeable future.

Answer 3

Financial Management

Question 4

It refers to the system for collecting, summarizing, analyzing and reporting, in monetary terms, financial information about an organization.

Answer 4

Accounting

Question 5

It provides information to parties inside and outside such as shareholders, bankers, creditors, management, etc.

Answer 5

Accounting

Question 6

The primary function of ________ is the procurement of funds and their optimum utilization. The important assignments of a financial executives are (a) assessment of capital requirement beforehand, (b) obtaining funds at the lowest capital cost, and (c) Optimal use of the funds.

Answer 6

Finance

Question 7

He is the custodian and manager of all the firm’s cash and near-cash resources.

Answer 7

Treasurer

Question 8

The ________ handles credit reviews and sets the policy for collecting receivables.

Answer 8

Treasurer

Question 9

He also handles the relationship with banks and other lending/financial institutions.

Answer 9

Treasurer

Question 10

The _______ in and management of long-term _______ through the capital budgeting process.

Answer 10

Investment

Assets

Question 11

Evaluating, securing, and servicing _______from within the firm or from the ________ such as common or preferred stock, debt, leases, warrants or convertibles.

Answer 11

Long-term financing

Capital market instruments

Question 12

_________ of the marginal (or divisional) ________ through attention to the firm’s target capital structure and various sources of funds available to the firm.

Answer 12

Management

Cost of capital

Question 13

_________ to the firm’s shareholders through a cash dividend policy.

Answer 13

Distribution of funds

Question 14

Securing, ________, and investing in ________ such as cash, accounts receivable, and inventory.

Answer 14

Managing

Current Assets

Question 15

Obtaining _________ from creditors or from the money markets.

Answer 15

Short-term financing

Question 16

_________ and ensuring that the firm responds to the changing and economic environment.

Answer 16

Planning for the ongoing activities of the firm

Question 17

________ the viability of ________ through merging, and ensuring the economic viability of the firm.

Answer 17

Assessing

Growth

Question 18

It is rational to accept profits as a standard for measuring the success or efficiency of a business enterprise; it is difficult to survive without _________.

Answer 18

Profit Maximization

Question 19

It provides a basic guideline according to which financial decisions can be evaluated, but returns are mainly based on the profits each by a firm.

Answer 19

Maximization of Return

Question 20

According to Prof. Ezra Solomon of Stanford University, “The ultimate goal of financial management should be maximizing the owner’s wealth.” according to him, the maximization of profit is half and an unreal motive.

Answer 20

Maximization of Wealth

Question 21

It is a careful estimate of short-term and long-term requirements of funds must be made.

Answer 21

Estimating the Requirement of Funds

Question 22

The investments in fixed assets and current assets have to be estimated through the techniques of budgetary control and long-range planning.

Answer 22

Estimating the Requirement of Funds

Question 23

After an estimate of the requirement of funds, a decision has to be taken regarding various source from which these funds could be raised.

Answer 23

Capital Structure Decisions

Question 24

Each source of fund involves different considerations with regard to cost, risk and control. Keeping these factors in view, an optimum financing mix of various sources has to be worked out.

Answer 24

Capital Structure Decisions

Question 25

The investment funds into various fixed and current assets also required careful scrutiny.

Answer 25

Investment Decisions

Question 26

Long-term funds should be invested in various projects only after an in-depth study through capital budgeting techniques and uncertainty analysis is made.

Answer 26

Investment Decisions

Question 27

Asset management policies should be laid down which relate to management policies should be laid down which relate to management of inventories, book debts, cash, trade, creditors, etc.

Answer 27

Investment Decisions

Question 28

The decision to declare a divided involves a number of considerations such as trend or earnings, trend or share market prices, requirement of funds for future growth, cash flow situation, restrictions under a companies act, tax position of shareholders etc.

Answer 28

Dividend Decision

Question 29

The controller has to strike a balance between the current needs of the firm for cash and the needs of the shareholders for adequate returns.

Answer 29

Dividend Decisions

Question 30

External reporting of balance sheet and profit and loss account includes:

Answer 30

- Shareholders - Financial institutions/banks - Taxation authorities - Government and semi-government autorities

Question 31

_________, popularly known as profit and loss account, shows the summary of income and expenses during a specified period.

Answer 31

Income and Expenditure

Question 32

Income and expenditure statement includes the following segments:

Answer 32

- sales of products/services - income from other than sales - manufacturing/factory cost - office and administrative cost - selling and distribution cost - finance cost - non-operating cost

Question 33

The ________ is a statement, which reveals its assets and liabilities on a particular date.

Answer 33

Balance Sheet

Question 34

It is not an account, as a convention the liabilities are recorded on the left side while the assets on the right.

Answer 34

Balance Sheet

Question 35

The ________ are total funds of the business, which include the owner's fund (equity) and borrowed funds. These funds are invested in various assets of an enterprise to earn profit.

Answer 35

Liabilities

Question 36

In other words, the _______ as resources are equal to the total assets on which the resources are deployed.

Answer 36

Liabilities

Question 37

________ are the valuable resources owned by the business entity and are used as the main criteria to earn profit.

Answer 37

Assets

Question 38

It consists of cash, back balances, short-term investments, sundry debtors of accounts receivables, bills receivables, inventories or stock of all kinds, prepaid expenses, accrued income, advances recoverable in cash or in kind for value to be received, short-term loans made, deposits kept with various authorities, advance payment of income-tax, current accounts, etc.

Answer 38

Current Assets

Question 39

It consists of land, building, plant, and machinery, furniture and fittings, electric installations, equipment, vehicles, etc. (to be shown at written down value, i.e., at original cost less accumulated depreciation).

Answer 39

Fixed Assets

Question 40

It consist of deferred revenue expenditure underwriting commission, preliminary expenses, development expenditures, R&D costs, and accumulated losses (to the extent not adjusted against free reserves.)

Answer 40

Miscellaneous Assets

Question 41

It consists of goodwill, technical know-how, patent, trademarks, copyrights, etc.

Answer 41

Intangible Assets

Question 42

It consists of trade creditors, accounts payable, bills payable, short-term loans from banks and others, short-term fixed deposit, short-term portion of long-term loans, outstanding advanced from customers, provisions for taxation, proposed dividend, unpaid dividend, etc.

Answer 42

Current Liabilities

Question 43

It consist of debentures, long-term loans from banks and financial institutions, deferred payment credits, long-term fixed deposits, loans from other convertible bonds, etc.

Answer 43

Long-term Liabilities

Question 44

It consists of capital reserves, committed reserved, general reserve, dividend equalization reserve, other free reserves, development rebate reserve, investment allowance reserve and residue surplus, share premium, etc.

Answer 44

Reserves

Question 45

It consists of paid-u portion of share capital-preference and equity share.

Answer 45

Share capital

Question 46

All cash and/or cheque transactions are entered in the ______, viz., receipts and payments.

Answer 46

Cash books

Question 47

Transactions are recorded in appropriate columns with necessary details.

Answer 47

Cash Books

Question 48

This book is balanced regularly so that the cash or bank account balance can be ascertained.

Answer 48

Cash Books

Question 49

All sales transactions are recorded in sales books.

Answer 49

Sales Book

Question 50

Entries in the sales book are made on the basis of invoices/bills, which are prepared and addressed to customers after the goods are despatched.

Answer 50

Sales Book

Question 51

All transactions of purchase are recorded in the ________.

Answer 51

Purchase book

Question 52

Entries in the ________ are made on the basis of bills/invoices which are received from supplier whenever goods are purchased.

Answer 52

Purchase Book

Question 53

For goods purchased and sold, certain adjustments are required to be made, viz., cancellations, reductions for equality rebate/discount, reduction for short quantity despatched, reduction for damaged goods, etc. to incorporate such adjustments in the accounts, either a debit note or credit note is issued against or in favor of the supplier/customer.

Answer 53

Debit Note/Credit Note Book

Question 54

These are recorded in the debit/credit note registers.

Answer 54

Debit Note/Credit Note Book

Question 55

All transactions which cannot be recorded in any other book are entered in the _________.

Answer 55

Journal

Question 56

These include, inter alia, rectification entries, transfer entries, closing entries, adjustments, provisions, etc.

Answer 56

Journal

Question 57

Once the transaction is recorded in the appropriate book/register, it has to be posted in the ledger to the appropriate account.

Answer 57

Ledger

Question 58

Since each and other every transaction is recorded with respect to the dual aspect, it is posted to the debit and credit of the appropriate account.

Answer 58

Ledger

Question 59

Each account in the _________ represents a summarized record of all transactions concerning that particular account.

Answer 59

Ledger