Prelim

Question 1

-It is the study and discipline of money, currency, and capital assets.
-It is related to and distinct from economies, which is the study of production distribution and consumption of goods and services.
-Defined as money management and includes activities such as investing borrowing lending budgeting and saving and forecasting.

Answer 1

Finance

Question 2

Financial management function areas:

Answer 2

Investment decision
Financing decision
Operating decision

Question 3

Fundamental concepts in financial management

Answer 3

*Research, time, and knowledge *Cost
*Revision and attention
*Power
*Accountability
*Money availability and planning *Confidence

Question 4

Extensive amount of research, time and in-depth knowledge is needed to make this financial information relevant

Answer 4

Research, time, and knowledge

Question 5

Financial data would require analysis and interpretation, it would need an expert or knowledgeable professional to do the job as such a appropriate cost is necessary to attract this type of personnel

Answer 5

Cost cost

Question 6

Constant study and undivided attention will be needed to identify these factor and make adjustments to the company’s financial plans and objectives

Answer 6

Revision and attention

Question 7

Financial managers are given this power to make judgement calls especially when the operations of the business will be affected

Answer 7

Power

Question 8

It places a heavy burden on accountability as those involved needs to monitor and make sure compliance is done to every set of producers and policies concerning the management of the company’s financial resources

Answer 8

Accountability

Question 9

Managing finances results in being able to identify sources and uses of it and appropriate measures can be made to avoid untoward situations may affect the company

Answer 9

Money availability and planning

Question 10

It adds value and confidence in the sense that this aspect of management puts a strong emphasis on efficient planning and control and influence

Answer 10

Confidence

Question 11

Role of financial manager

Answer 11

*Raise needed funds for the business operation
*Proper allocation of financial resources
*Profit planning
*Knowledge of capital markets

Question 12

It is also known as statement of cash flows or funds flow statement. it is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents and breaks the analysis down to operating, investing, and financing activities and provides information about the cash receipts and cash payments of an entity during the period.

Answer 12

Cash flow statement

Question 13

Classification of activities on a cash flow statement:

Answer 13

Operating activities
Investing activities
Financing activities

Question 14

Cash flows related to selling goods and services that is the principal business of the firm

Answer 14

Operating activities

Question 15

A section of cash flow statement that shows the cash generated or spent relating the investment activities

Answer 15

Investing activities

Question 16

Activities that impact the long term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement

Answer 16

Financing activities

Question 17

Methods for preparing cash flow statements

Answer 17

*Direct method
*Indirect method