Question 1

An unsecured loan does not require a borrower to provide collateral to secure a loan.

Accepted Answer

A) True 
 B)False

Question 2

Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.

Accepted Answer

A) True 
 B)False

Question 3

Murray is the manager of Oh! Canada Sporting Goods.He is concerned that his cash expenditures have been exceeding his cash receipts for the last six months.Oh! Canada is suffering from a(n) ________ problem.

Accepted Answer

A)  accounting
B)  undercapitalization
C)  cash flow
D)  exchange rateE) C) and D)
F) A) and B)

Question 4

The main reason why companies want to maintain a minimum cash balance is:

Accepted Answer

A)  the balance sheet always needs to reflect a cash balance.
B)  they are required by law.
C)  cash,in and of itself,can earn a very high rate of return.
D)  to make sure there is a pool of cash available to deal with an expected need.E) None of the above
F) B) and C)

Question 5

Which of the following statements is most accurate?

Accepted Answer

A)  Accounting and finance are not related.
B)  Financial managers keep the books for a firm.
C)  Financial managers need to understand accounting.
D)  Non-profit organizations must choose between accounting and finance.E) None of the above
F) B) and C)

Question 6

)The last step in the financial planning process is to establish financial controls.

Accepted Answer

A) True 
 B)False

Question 7

Commercial paper consists of unsecured short-term debt.

Accepted Answer

A) True 
 B)False

Question 8

The FeelsoGood Furniture Stores often rely on factoring to meet their short-term financing needs.This means that FeelsoGood borrows money from a finance company and pledges its accounts receivables as collateral.

Accepted Answer

A) True 
 B)False

Question 9

Kereck owns commercial paper issued by Prude Insurance Corporation that matures in 180 days.However,shortly after Kereck purchased the commercial paper,Prude Insurance went out of business.Kereck is not worried because his loan to the corporation is secured by collateral that he can now claim.

Accepted Answer

A) True 
 B)False

Question 10

) Which business function involves collecting payments from customers?

Accepted Answer

A)  Accounting
B)  Production
C)  Marketing
D)  FinanceE) None of the above
F) All of the above

Question 11

Factoring refers to the process of selling off accounts receivable for cash.

Accepted Answer

A) True 
 B)False

Question 12

)Unlike bonds,stocks offer the advantage of tax deductible interest payments.

Accepted Answer

A) True 
 B)False

Question 13

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Accepted Answer

A) True 
 B)False

Question 14

Financial managers identify three steps to financial planning.Which of the following is not one of the three key steps to financial planning?

Accepted Answer

A)  Forecasting both short-term and long-term financial needs.
B)  Developing budgets to meet anticipated needs.
C)  Preparing the income statement and balance sheet.
D)  Establishing financial control to see how well the company is following the financial plans.E) All of the above
F) None of the above

Question 15

Only financially stable firms are able to sell commercial paper to raise short-term funds.

Accepted Answer

A) True 
 B)False

Question 16

Long-term loans are often more expensive than short-term loans.

Accepted Answer

A) True 
 B)False

Question 17

Most small businesses are unable to secure long-term financing.

Accepted Answer

A) True 
 B)False

Question 18

One step in the financial planning process is to establish control procedures that allow managers to monitor the organization's performance.

Accepted Answer

A) True 
 B)False

Question 19

A revolving credit agreement represents a line of credit that is guaranteed.

Accepted Answer

A) True 
 B)False

Question 20

Lancer Wholesale Company wants to improve cash flow provided by accounts receivable collections.Which of the following strategies would be most likely to help Lancer achieve this objective?

Accepted Answer

A)  Relaxing its credit policy for new customers.
B)  Offering cash discounts to buyers who pay their accounts promptly.
C)  Accepting IOUs from customers who buy in large quantities.
D)  Offering extended payment plans to qualified buyers.E) None of the above
F) A) and D)

Exam 17: Financial Management

An unsecured loan does not require a borrower to provide collateral to secure a loan.

Correct AnswerverifiedShow Answer

A share of stock represents a company-issued IOU including a promise to repay on a certain date.

Correct AnswerverifiedShow Answer

Long-term loans are often more expensive than short-term loans.

Correct AnswerverifiedShow Answer

)Unlike bonds,stocks offer the advantage of tax deductible interest payments.

Correct AnswerverifiedShow Answer

) Which business function involves collecting payments from customers?

Correct AnswerverifiedShow Answer

Factoring refers to the process of selling off accounts receivable for cash.

Correct AnswerverifiedShow Answer

Murray is the manager of Oh! Canada Sporting Goods.He is concerned that his cash expenditures have been exceeding his cash receipts for the last six months.Oh! Canada is suffering from a(n) ________ problem.

Correct AnswerverifiedShow Answer

Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.

Correct AnswerverifiedShow Answer

A revolving credit agreement represents a line of credit that is guaranteed.

Correct AnswerverifiedShow Answer

Commercial paper consists of unsecured short-term debt.

Correct AnswerverifiedShow Answer

Lancer Wholesale Company wants to improve cash flow provided by accounts receivable collections.Which of the following strategies would be most likely to help Lancer achieve this objective?

Correct AnswerverifiedShow Answer

The FeelsoGood Furniture Stores often rely on factoring to meet their short-term financing needs.This means that FeelsoGood borrows money from a finance company and pledges its accounts receivables as collateral.

Correct AnswerverifiedShow Answer

Financial managers identify three steps to financial planning.Which of the following is not one of the three key steps to financial planning?

Correct AnswerverifiedShow Answer

Kereck owns commercial paper issued by Prude Insurance Corporation that matures in 180 days.However,shortly after Kereck purchased the commercial paper,Prude Insurance went out of business.Kereck is not worried because his loan to the corporation is secured by collateral that he can now claim.

Correct AnswerverifiedShow Answer

Only financially stable firms are able to sell commercial paper to raise short-term funds.

Correct AnswerverifiedShow Answer

The main reason why companies want to maintain a minimum cash balance is:

Correct AnswerverifiedShow Answer

Most small businesses are unable to secure long-term financing.

Correct AnswerverifiedShow Answer

One step in the financial planning process is to establish control procedures that allow managers to monitor the organization's performance.

Correct AnswerverifiedShow Answer

)The last step in the financial planning process is to establish financial controls.

Correct AnswerverifiedShow Answer

Which of the following statements is most accurate?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified