SUCCESS

SERIES

FINANCIAL MANAGEMENT
1. A(n) is a review of accounting 3. Doubling Period can be calculated
records and procedures. with the help of
A. evaluation A. Rule of 72
B. budget B. Rule of 69
C. audit C. By referring to the CF Table
D. financial plan D. All of the Above

2. In his traditional role the finance man- 4. A company is likely to declare higher
ager is responsible for dividends if
A. Tax rates are high
B. Tax rates are relatively lower
C. Tax rate has no effect on dividend
declaration
D. None of the above

5. An earnings report includes

A. proper utilisation of funds A. the number of sick days an em-
ployee has available
B. arrangement of financial resources
B. the employee’s job title
C. acquiring capital assets of the or- C. the amount of deductions for the
ganization current pay period
D. Efficient management of capital D. all of the above

1. C 2. D 3. D 4. B 5. C 6. B
8 Chapter 1. Financial Management

6. True or False.The financial account- 12. Liquidity is the ability of the business
ing provide information for investors to:
and customers.
A. Satisfy its short-term obligations
A. False as they become due
B. True
B. Generate income that will exceed
7. When someone famous uses their own cost
image to help promote a particular
product, it is called . C. Maximise revenue from sales while
limiting expenses to the essential
A. billboard
D. Ensure assets of the business ex-
B. endorsement
ceed its liabilities
C. placement
D. spread 13. Alyssa has her first job at the local
bakery. After working for one week,
8. Which of the following individuals she received her first paycheck. The
has the direct responsibility for share- total amount of money she is able to
holder relations? put in the bank is $75.62. What type
A. Controller of income does this amount describe?

B. Chief financial officer A. Gross Income

C. Chief executive officer B. Net Income
D. Treasurer
C. Both Gross and Net Income
9. Fixed assets are items of value that
will be held for more than one year. D. None of the above

A. True 14. The form of business which has un-

B. False limited number of shareholders and
large scale economic operations refers
10. What is the formula for DVI for a to:
fixed price engagement?
A. Forecast Contribution - Budgeted
Contribution = DVI
B. GOP - Business Development =
DVI
C. Revenue - Direct Costs = DVI
D. Contribution - Indirect Costs =
DVI
11. Which of the following is not a lim-
itation of analysis of financial state-
ments?
A. Sole proprietorship
A. Affected by personal bias
B. Corporation
B. To know the financial strength
C. Lack of Qualitative Analysis C. Partnership

D. Based on accounting concepts D. Small enterprise

7. B 8. D 9. A 10. A 11. B 12. A 13. B 14. B 15. B

 9
15. Process of gathering, analyzing, and A. Shareholders
interpreting information about mar- B. Board of Directors
ket, product, or service to be offered
for sale in the market, about the past, C. VP for Finance
present and potential customers for D. VP for Production
the product or service.
21. The comparison of cash to debt based
A. MARKETING PLAN on the concept that a business should
B. MARKET RESEARCH have at least enough money on hand
to pay its current debts.
C. MARKETING STRATEGY
A. return on investment (ROI)
D. PRODUCT TESTING B. current ration
16. Which of the following is NOT listed C. debt ration
as a useful unit strategy when address- D. quick ratio
ing budget reductions?
22. Nedbank, FNB and Standard Bank
A. Sharing resources with other units
are examples of?
A. Deposit taking institutions
B. Cutting back on non-essentials
B. Non deposit taking institutions
C. Responding reactively rather than
C. Pension funds
proactively
D. Providents funds
D. Considering outsourcing
23. Capital budgeting related to
17. Financing obtained from an investor
A. long term assets
or investment group that lends large
sums of money to promising new or B. short term assets
expanding small companies. C. long term assets and short term
A. Investment Banks assets

B. Stock Options D. fixed assets

C. Venture Capital 24. The finance manager is accountable

for.
18. Factors that make time value of money A. Earning capital assets of the com-
possible are pany
A. Time, Money, Security B. Effective management of a fund
B. Time, Money, Investments C. Arrangement of financial resources
C. Time, Interest, Investments
D. Proper utilization of funds
D. Time, Money, Interest
25. Net profit after taxes is
19. You should wait until you graduate
high school to prepare for a career. A. gross profits minus operating ex-
penses
A. True
B. sales revenue minus cost of goods
B. False sold

20. Considered the highest policy making C. EBITDA minus interest

body in a corporation D. EBIT minus interest and taxes

16. C 17. C 18. D 19. B 20. B 21. D 22. A 23. A 24. C 25. D
10 Chapter 1. Financial Management

26. Each of the four sides of a swimming 30. Three components of the statement
pool measures 12 meters. The pool of cash flows are:
is 6 meters deep. How much water
will be needed to fill it completely?
Use your calculator to calculate using
exponents.
A. 144 cubic meters
B. 864 cubic meters
C. 72 cubic meters
A. Cash flow from financing activities
27. Using the chart above, determine
which bank has the highest interest
B. Cash flow from administrative ac-
charged on their personal loans.
tivities
C. Cash flow from operating activities

D. Cash flow from investing activities

E. Cash flow from capital activities

31. Demand for foreign exchange in
A. Bank of US America is increased by all of the fol-
lowing except
B. Pay Day Loans
A. an increase in demand by Ameri-
C. Federal Credit Union cans for imported commodities.
28. Kaitlyn’s company needs to obtain B. an increase in American exports.
funds in order to keep the business C. an increase in the number of Amer-
going; however, she does not want icans traveling abroad
stockholders influencing the direction
D. an increase in the desire of Ameri-
of her company. What type of financ- cans to invest abroad
ing should Kaitlyn acquire?
E. Not aware of
A. Equity capital
32. All of the following are ways to help
B. Combination of debt and equity minimize depreciation except
capital
A. it doesn’t matter what you do
C. Angel investor you cannot slow depreciation
D. Debt capital B. buy cars that have manufacturer’s
warranties that are still valid
29. A(n) is a predication of future C. keep the car maintenance up to
sales based on past sales date
A. sales forecast D. buy slightly used cars about 1-3
years old
B. income statement
33. What is considered to be "retirement"
C. balance sheet
age, when it is acceptable to begin tak-
D. source document ing IRA distributions without penalty?

26. B 27. B 28. D 29. A 30. A 30. C 30. D 31. B 32. A 33. B
 11
A. 50

B. 59 1/2
C. 65
D. 70 1/2

34. Ke = D/MP x 100, is used for

A. Reserve

B. Calculating capital structure B.

C. Depreciation

D. calculating Cost of Equity Share

Capital

35. All banks are the same, so you can

choose any bank without checking
rates.
A. Thumbs up
C.
B. Thumbs down

36. Nancy’s 50-meter freestyle swim time

was 28.004 seconds. Betty’s 50-meter
freestyle swim time was 27.949 sec-
onds. What was the difference be-
tween Nancy’s and Betty’s swim times?

A. 0.088 second
B. 0.055 second
C. 0.099 second
D. 0.801 second 39. Which of the following is not a service
provided by financial institutions?
37. You buy a copy of your favorite movie
for $23.45. You give the clerk $25. A. Buying the business of customers
How much change will you receive? B. Investing customers’ savings in
A. $1.50 stock and bonds

B. $1.55 C. Paying savers’ interest on de-

posited funds
C. .95
D. Lending money to customers
D. $1.56
40. One of the Partnership’s weaknesses
38. Which of the following is an example is Unlimited Liability.
of want? A. True
A. B. False

34. D 35. B 36. B 37. B 38. A 39. A 40. A 41. B

12 Chapter 1. Financial Management

41. Which situation shows a financially B. Mr Hazry is a teacher with an in-

responsible citizen? come of RM3,000 and plans to get
married in two years’ time. The wed-
A. Purchasing an expensive automo-
bile you CANNOT afford. ding expenses are estimated to be
RM30,000. Therefore, he wants to
B. Only buying items that you CAN save RM1,000 a month for a period
afford of two years. Besides that, she also
C. Throwing money out the window. plans to get a loan for the wedding
expenses.
D. Hiding your money under your
mattress. C. Miss Hazwanyza wants to buy a
house worth RM200,000 if she has
42. Financial claims to all assets sufficient amount of money
A. owner’s equity
46. The meaning of capital structure re-
B. assets lates to the percentage of sources.
C. liabilities A. Long-term
D. equity
B. Medium term
43. Financial planning arrives at C. Short-term
A. Minimising the external borrowing D. Current
by restoring to equity issues.
B. Entering that the firm always have 47. The percentage deducted from an in-
significantly more funds than required dividual’s paycheck to assist in fund-
so that there is no paucity of funds. ing government agencies within the
state.
C. Ensuring that the firm paces nei-
ther a shortage nor a gluten of unus- A. Federal Withholding Tax
able funds.
B. Debits
D. Doing only what is possible with
the funds that the firms has at its dis- C. State Withholding Tax
posal. D. Interest
44. EBIT refers to: 48. This is how much a person earns for
A. Earning Before Interest and Tax every hour worked
B. Earning Before Income and Tax A. net pay
C. Earning Before Investment and B. gross pay
Tax
C. hourly pay
D. Earning Before Installment and
Tax D. allowance

45. Among the following individuals, who 49. What is the value of a dime?
sets the SMART goals?
A. $.05
A. Puan Hadirah intends to buy a lap-
top which costs RM3,000 as a birth- B. $.10
day gift for her son. Therefore, she C. $.25
plans to save RM300 a month for ten
months 50. What does a person’s will list?

42. D 43. C 44. A 45. A 46. A 47. C 48. C 49. B 50. D 51. A
 13
A. Financial goals 56. The main aim of the Finance manager
is to
B. Types of insurance they have
C. Retirement plans A. Maximize the profit

D. Financial plan upon death B. Maximize the EPS

C. Maximize the wealth of the Share-
51. Using a credit card is similar to a loan. holders
A. True D. Maximize the Salaries of the Man-
B. False agers

52. If the nominal rate of interest is 10% 57. Loan syndication refers to getting
per annum and there is quarterly com- for projects from consortium.
pounding, the effective rate of interest
A. Term Loan
will be:
B. Gold Loan
A. 10% per annum
C. Cash Loan
B. 10.10 per annum
D. House Loan
C. 10.25%per annum
D. 10.38% per annum 58. When your bill might be late, what
should you do?
53. Statement of Changes in Equity
A. Call your lender
shows:
B. Email your lender
A. Changes in share capital and re-
serves C. Mail a letter to your lender
B. Changes in profit 59. Finance is the art of the recording
C. Changes in assets and liabilities and reporting financial transactions.
D. Changes in share price A. True
B. False
54. What is credit?
A. Trust from a creditor/lender that 60. If business uses assets on lease, it will
you will repay the funds borrowed. A. increase working capital require-
B. A small plastic card that allows you ment
pay for something without using cash. B. increase fixed capital requirement
C. decrease working capital require-
C. Risk associated with borrowing ment
money.
D. decrease fixed capital requirement
D. Interest on good purchased.
61. The objectives or goals of financial
55. Money that a person owes to another management are to maximize ?
person or bank/credit card company
is A. Sales

A. Credit B. Profits

B. Investment C. Owner’s wealth

C. Debt D. Total assets

D. Checking 62. Federal agency debt

52. D 53. A 54. A 55. C 56. C 57. A 58. A 59. B 60. D 61. C 62. B
 14 Chapter 1. Financial Management

A. Short term debt supplies, inventory, and land are all

identified as what in a financial plan?
B. Long term debt
A. Operating Expenses
63. If the federal reserve increased the in- B. Assets
terest rate to slow down the economy
they would be using: C. Capital

A. monetary policy 69. Investment Decisions involve

B. fiscal policy A. Capital Budgeting Decisions
C. fiduciary policy B. Working Capital Decisions
D. regressive policy C. Both of the above
D. None of the above
64. Combined Leverage is obtained from
OL and FL by their 70. In a fixed exchange rate system, gov-
A. Addition ernments/CBs stand ready to buy and
sell currency at official exchange
B. Subtraction rates.
C. Multiplication A. True
D. Any of these B. False
E. None of the above 71. What is the payment method that
65. A car manufacturing company en- can be used to rent cars or reserve
tered into the market with air con- hotel rooms?
ditioner and now introduced products A. Currency
like refrigerator, washing machine and
B. Credit card
other electronic items. The company
not only offering the product but also C. Check
handling complaints and after sales
72. Stafford loans, Perkins loans, and
services.Identify the element of mar-
Plus loans are all from the
keting mix discussed here.
government.
A. product mix
A. alternative loans
B. price mix
B. federal loans
C. place mix
C. scholarships
D. promotion D. grants
66. Variance and standard deviation mea- 73. Dean has a basic account that allows
sure the volatility of returns him to deposit and withdraw money,
A. True write checks, and receive a monthly
statement with no service charge if
B. False he maintains a minimum balance of
67. The electric company will accept a $500. What type of account is this?
minimum payment less than the full A. Checking Account
balance.
B. Savings Account
A. True
C. Retirement Plan Account
B. False
74. A ’business plan’ is a
68. equipment, buildings,

63. A 64. C 65. A 66. A 67. B 68. B 69. C 70. A 71. B 72. B 73. A 74. B
 15
A. list of annual tasks the business A. asset management plan
needs to achieve B. budget
B. document that describes the aims C. strategic plan
and strategies of a business
D. financial plan
C. set of criteria that banks require
for businesses to be registered 80. The table shows part of Encik Halim’s
monthly financial plan.Express p as a
75. any item or expense subtracted from percentage of the net income.
gross income
A. taxes
B. deductions
C. capital gains

76. Finance functions are A. 25%

A. Planning for funds B. 20%
B. Raising of funds C. 15%

C. Allocation of funds D. 10%

D. All of the above 81. Pay Back Method of Capital Budget-

ing is suitable for
77. Which league has seen the most dra- A. Small Projects
matic growth in TV revenues over the
last 15 years? B. Large Projects
C. Both of them
A. NHL
D. None of them
B. NFL
82. The formula to calculate future value.
C. NBA
A. FV = (P + i)n
D. MLB
B. FV = P (1 + i)n/m
78. The concept of Financial manage- C. FV = P (1 + i)n
ment is.
D. FV = P/(1 + i)n
A. Profit maximization
83. The important goal of the financial
B. All features of obtaining and us- service industry is to mobilise and al-
ing financial resources for company locate
operations
A. Saving
C. Organization of funds B. Sales
D. Effective Management of every C. Purchase
company
D. All the above
79. A(n) is a document that specifies 84. What is gross pay?
the funds a firm will need for a pe-
riod of time, the timing of inflows and A. Gross pay is before taxes are taken.
outflows, and the most appropriate
sources and uses of funds. B. Gross pay is after taxes are taken.

75. B 76. D 77. B 78. B 79. D 80. C 81. A 82. C 83. A 84. A
16 Chapter 1. Financial Management

85. Cash & Cash Equivalent - 24,890Held D. EBITDA interest coverage ratio
for Trading - 10,000Trade and measures the cash operational capabil-
Other Receivables - 16, 000Inven- ity of the entity to pay its contractual
tory - 8,960If total current liabilities obligations.
amounted to 19,900. What is the
quick ratio? 90. Which one is not a source of redemp-
tion of debentures
A. 3.00
A. Capital
B. 2.55
B. Capital reserve
C. 3.01
C. Profits
D. 2.56
D. New issue of shares and deben-
86. Sara worked an 8 hour shift and tures
makes .12 per doll, she makes 80 dolls
per hour, what was her gross pay for 91. An is a review of the financial
that day? statements of business and the ac-
counting practices that were used to
A. $80.76
produce them
B. $76.80
A. income statement
C. $75.80
B. financial statement
D. $60.00
C. audit
87. The record that proves a business
D. statement of cash flows
transaction occurred is a(n)
A. source document 92. Which of the following statements
best represents the "Agency Problem"?
B. ledger
A. Managers might attempt to bene-
C. journal fit themselves in terms of salary and
D. balance sheet perquisites at the expense of share-
holders.
88. expenses that remain the same from
one period to the next B. The agency problem results from
the separation of management and
A. credit the ownership of the firm.
B. fixed expenses C. The agency problem may interfere
C. gratuity with the implementation of maximiz-
ing shareholder wealth.
89. Which of these statements is incor-
D. all of the above
rect?
A. Quick ratio may be higher than 93. A number that represents a person’s
current ratio. credit history

B. ROI would always be lower than A. Credit Card Number

ROCE. B. Credit Score
C. Receivable turnover ratio is inte-
C. Asset
gral to the computation of days sales
outstanding. D. Credit Limit

85. D 86. B 87. A 88. B 89. A 90. B 91. C 92. D 93. B 94. B
 17
94. If an individual puts $400 into a sav- 99. buying a house if you put a down
ings account with a simple interest payment of 20% instead of 10% you
rate of 1.25% APR how much will be avoid paying?
in the account after 10 years assuming
they don’t add anymore?
A. $900
B. $450
C. $425
D. $550

95. Apples are on sale for $1.50 for 3

pounds. Calculate the unit price.
A. $0.50/lb
B. $1.50/lb
C. $4.40/lb A. Private mortgage insurance
B. Extra fees towards your closing
96. The decisions related to the working
cost
capital is called as
A. Long term Investment Decision C. The first month’s house payment

B. Financing Decision D. Higher interest rate

C. Dividend Decision 100. Which factor would make your credit

D. Liquidity Decision score goUP?
A. Length of credit history
97. What is the definition of Expenses?
B. Using most or all of your
A. The money from selling goods and
available credit
services
B. Cash you are spending in the busi- C. Excessive number ofcredit in-
ness quiries

C. Costs of running the business 101. Which term means actively looking
D. The outgoings relating specifically for qualified employees?
to vehicles A. background check
98. Sara used her debit card at Sam’s B. recruitment
Cafe and wants to know her current
C. human resources management
balance. Based on the check register
below, Sara’s current balance is: D. meeting staffing needs

102. Businesses use aging of accounts to:

A. study the effectiveness of accounts
receivable collection
B. determine which accounts payable
A. 402.90 to pay first
B. 379.34
C. decide when equipment needs
C. 391.12 to be replaced

95. A 96. D 97. C 98. B 99. A 100. A 101. B 102. A

18 Chapter 1. Financial Management

D. increase the credit limit for cus- C. Dividend and Book Value of the
tomers who have difficulty paying shares
their accounts D. None of the above
103. Which of the following statements is 108. Deficit
correct?
A. Expenses are more than income.
A. If the NPV of a project is greater
than 0, its PI will equal 0. B. Income is more than expenses

B. If the IRR of a project is 0%, its 109. Jackson spends in gas changes ev- ery
NPV, using a discount rate, k, greater month, based upon the price of gas,
than 0, will be 0. this is an example of which of the
following:
C. If the PI of a project is less than 1,
its NPV should be less than 0. A. Fixed Expense

D. If the IRR of a project is greater B. Variable Expense

than the discount rate, k, its PI will be C. Periodic Expense
less than 1 and its NPV will be greater
than 0. 110. RENT , HOUSE INSTALMENT, IN-
SURANCE, AND CREDIT CARD
104. Employees rather than managers are PAYMENT ARE :
responsible for the financial health of
A. FIXED EXPENSES
a company
B. VARIABLE EXPENSES
A. true
111. Which does not belong to the group?
B. false
A. Preference Share Capital
105. a venture capitalist is
B. Preference Share Redemption
A. someone will to risk money on an- Fund
other person’s business.
C. Share Premium - Ordinary
B. a type of marketing strategy.
D. Ordinary Shares
C. someone currently going bankrupt.
112. Below are examples of non-profit or-
ganization, except
D. A person who starts a business of
their own. A. Malaysian Nature Society
B. MAKNA
106. Who is NOT at risk of internet
fraud? C. Permodalan Nasional Berhad

A. People who shop online D. Mercy Malaysia

B. People who only pay with cash 113. The illustrates how much profit
is generated per dollar of sales.
C. People who use social media
A. new profit ratio
107. The total returns from the invest-
B. current ratio
ment in share is classified as
C. financial ratio
A. Dividend and Capital appreciation
D. sales forecast
B. Dividend and Market price of 114. What is the other name of long term
share decision?

103. C 104. B 105. A 106. B 107. A 108. A 109. B 110. A 111. B 112. C 113. A
114. A
 19
A. Capital Budgeting 119. is the financial manager for
Empire State Fabrication and has de-
B. Gross working capital
cided to raise additional funds for
C. Financial management the company by raising equity capital.
D. Working Capital She might do so by
A. establishing a line of credit with a
115. an employee that generates income
local bank
for each item or piece they produce
B. selling marketable securities
A. piece rate employee
C. persuading existing owners to
B. quota based commission
con- tribute additional funds
C. tipped employee
D. selling a bond
116. Why do the firm need to do the basic
cash management? 120. Measuring data counts and are ex-
pressed by numbers
A. Qualitative
B. Quantitative
C. Value
D. None of these

121. Shows the relationship of expenses to

A. The firm want to has low average sales.
payment period A. operating ratio
B. The firm want to has low average
B. current ratio
collection period
C. debt ratio
C. The firm want to has many cus-
tomer D. income ratio
D. The firm want to connect with 122. Financial Break-even Level of EBIT
many suppliers is
117. A budget created in the planning A. Intercept at Y axis
stages for a new business is called a(n) B. Intercept at X axis
C. Slope of EBIT-EPS line
A. start up budget
D. None of the above
B. cash flow budget
C. expense budget E. None of the above

D. operating budget 123. What is a creditor?

118. The total amount taken from the em- A. The person that collects your pos-
ployee’s paycheck for medical benefits. sessions if you don’t pay your debt.

A. FICA
B. Someone who the loan or debt is
B. Medicare owed to.
C. Medicaid
124. Current liabilities are amounts owed
D. Medical that will be paid in less than

115. A 116. B 117. A 118. D 119. C 120. B 121. A 122. B 123. B 124. C
20 Chapter 1. Financial Management

A. one month. 130. Discounting technique is used to find

out
B. six months.
A. Terminal Value
C. one year.
B. Compounded value
D. five years.
C. Present Value
125. An estimate of a business’s financial
outlook for each of the next few years D. Future value
E. None of the above
A. financial plan
B. financial forecast 131. Sound financial management requires
assets to be managed and acquired ef-
C. financial statements fectively and efficiently.
D. budget A. True
126. which one is NOT a method of floata- B. False
tion in Primary market
132. which of the following is NOT a lim-
A. Issue of Forfeited shares itation of ARR method
B. Offer for sale A. Ignores Time value of money
C. rights issue B. Differential investment outlay of
D. Offer through prospectus projects not considered
C. Ignores reinvestment of profits
127. The money a business owes and the
payments it makes for credit pur- D. Comparision of Projects with dif-
chases are recorded in the ferent characters can be made
A. cash record 133. How old can you be to open a sav-
B. accounts payable record ings or checking account?
A. 13 with a guardian
C. depreciation record
B. 20
D. accounts receivable record
C. 5 with a guardian
128. Which of the following is true about
sales taxes? D. 18 with a guardian

A. The national sales tax percentage 134. Having lots of credit cards shows that
is 6% you are an important person.
B. The federal government will A. Fact
deduct it from your paycheck B. Fiction
C. You don’t have to pay the tax if 135. What is the formula for Discretionary
your income is very low Financing Needed?
D. It makes things more expensive for A. Forecast Total Assets - Forecast
you to buy Total Liabilities and Equity
129. Sales and profits for a specific period B. Forecast Total Assets - Forecast To-
are reported in a company’s income tal Liablities
statement.
C. Total Assets - Total Liabilities
A. True D. Total Assets - Total Liabilities and
B. False Equity

125. B 126. A 127. B 128. D 129. A 130. C 131. A 132. D 133. A 134. B 135. A
 21
136. Which of the following is not an in- A. Debenture
come? B. Mortgage
A. Salary C. Convertible
B. Bonus D. Registered
C. Allowance 143. What does it mean when financial
D. House monthly installment managers doing financial control?

137. The employee knows exactly which A. comparing actual revenues, costs
day his/her paycheck will be deposited & expenses with its budget planning
into their depository institution ac- B. estimating the company’s short
count. and long term financial needs
A. Paycheck with attached paycheck C. setting income forecast and allo-
stub cating the use of the company’s finan-
cial resources
B. Direct Deposit
C. Payroll Card 144. I want to make my money grow so I
can pay for university.
138. Short-term liabilities that a business A. Spending
owes it creditors
B. Saving
A. assets
C. Investing
B. accounts receivable
D. Donating
C. owner’s equity
145. Patrick is working for an hourly wage
D. accounts payable of $15. If he worked for 28 hours last
week, what is his gross pay?
139. The purpose of taxes is to
A. $450
A. Improve roads
B. $375
B. Support the government
C. $420
C. Pay retirement benefits
146. Which of the following is true of a
D. All the above
bank?
140. Factoring and collateral in the form of A. Is technically owned by people
accounts receivable are the exam- ple that hold accounts
of
B. Runs as a for profit business
A. Secured financing C. Has much higher interest rate for
B. Unsecured financing savings accounts

141. With direct deposit, an employer D. Is a non profit financial institution

transfers net pay electronically into 147. Anyone can be an entrepreneur and:
an employee’s bank account.
A. you must be 21 years of age to get
A. True started.
B. False B. you can begin at any age.
142. Bond that can be converted to com- 148. Of the savings instruments listed, the
mon share is? one with the highest risk is the:

136. D 137. B 138. D 139. D 140. A 141. A 142. C 143. A 144. C 145. C 146. B
147. B 148. C
22 Chapter 1. Financial Management

A. savings account 155. These types of banks emphasize loans

for residential mortgages; in- cluding
B. money market fund
savings and loans and mutual savings
C. mutual fund banks.
D. treasury bill A. Credit Unions

149. Municipal bonds B. Commercial Banks

A. Short term debt C. Savings Institutions

B. Long term debt D. Nonbanks

150. Which is not the pricing strategy 156. The vaccine for Covid-19 offered by
listed below? Bharat Bio is called:

A. Cost Oriented A. Covishield

B. Market Oriented B. Covaxin

C. Margin Pricing C. Comirnaty

D. Number Pricing D. None of the above

151. Financial institution that must accept 157. Which theory states that the overall
demand deposits, make consumer and cost of capital of a firm gets reduced
commercial loans, and buy and sell in proportion to the volume of debt
currency and government securities. capital used or increased

A. Bank A. Traditional theory

B. Nonbank B. Modigliani - Miller Theory

C. Net Income Theory
152. What type of expense (Fixed, Vari-
able or Periodic) is purchasing gas for D. Net Operating Income theory
your car?
158. Borrowed money that will be used
A. Fixed for more than one year
B. Variable A. Financial Leverage
C. Periodic B. Financial Management

153. A credit report contains my personal C. Line of Credit

information such as my address and D. Long-Term Financing
social security.
159. Which form is used to determine gov-
A. True
ernment assistance and other money
B. False from the government?

154. safe mode by which firms perform A. W-4

worldwide business is B. FICA
A. Licencing C. 1040
B. Franchising D. FAFSA
C. International trade
160. What is a credit referring to a check-
D. Establishment of new subsidiary ing account?

149. B 150. D 151. A 152. B 153. A 154. C 155. C 156. B 157. C 158. D 159. D
160. A
 23
A. Deposit or an addition to the ac- A. provide info about ability to meet
count long term obligations
B. Subtraction or a minus to the ac- B. provide info about ability to meet
count short term obligations

C. What is on your credit report C. Provide information on market

value only
D. When you enter your pin number
D. Are closely related to sales
161. Investment in current assets
167. Anything of value
for longer duration is called fixed
capi- tal. A. asset
A. True B. equity

B. False C. liability
D. medium of exchange
162. Owners’ equity is the value of the
business after liabilities are subtracted 168. type of financing is usually done
from assets. for financing high risky businesses
A. True A. leasing

B. False B. veture capital

C. hire purchase
163. The NC Department of is respon-
sible for collecting taxes in the state D. factoring
of NC
169. Which one is classified as ’Assets’?
A. Treasury A. Accounts payable
B. Income B. Common stock
C. Revenue C. Bonds

164. This means putting money into a D. Inventories

bank account 170. Financial ratios can be analyzed in
A. induction three ways, except

B. deduction A. Comparing to Industry Averages

B. Compared to Company Goals and
C. deposit
Debt Covenants
D. reduction
C. Comparing to Market Averages
165. Which is a form potential employees D. Trend Analysis
must complete?
171. If the exchange rate
A. application depreciates, im- ported goods are for
B. resume domestic res- idents, and domestic
exports are for foreign citizens.
C. job description
A. cheaper; cheaper
D. job listing.
B. cheaper; more expensive
166. Profitability ratios C. more expensive; more expensive

161. B 162. A 163. C 164. C 165. A 166. D 167. A 168. B 169. D 170. C 171. D
172. B
24 Chapter 1. Financial Management

D. Any of the above could be correct 178. Financial Management is based on

depending on other factors. three principles. Which of the follow-
E. Not aware of ing is not one of these principles?
A. Risk-return principle
172. An account at a bank that allows you
to easily access your funds, the ac- B. Fixed costs versus variable costs
count that checks are withdrawn from C. Cost-benefit principle
A. savings account D. Time value of money
B. checking account
179. Owners can have more personal ties
C. credit card with customers
173. Intermediaries between savers and A. Small Businesses
borrowers that collect funds from
B. Large Businesses
savers and then lend the funds to indi-
viduals, businesses, and governments 180. is financial institution.
A. Financial Institutions A. SEBI
B. Financial Securities B. Commercial bank
174. I want to go to Pulau Perhentian on C. LIC
vacation this summer. D. RBI
A. Specific
181. A(n) is the reverse of a merger.
B. Measurable
A. LBO
C. Attainable
B. divestiture
D. Realistic
C. acquisition
E. Time-bound
D. tender offer
175. The type of corporate ownership that
has first claim on profits and assets 182. Realistic credit standards revolve
around the four C’s of credit. Which
A. Preferred Stock of the following is not one of the four
B. Prime Interest Rate C’s?
C. Promissory Note A. Cash
D. Short-term Financing B. Character
176. What is related to debt C. Capital
A. Higher cost higher risk D. Capacity
B. Lower cost higher risk 183. Open-end credit is
C. High cost low risk A. revolving credit.
D. Low cost low risk B. one time only credit.
177. Joint venture is 184. Which financial institution usually
A. Not jointly owned by has the highest interest rates?
B. It is licencing A. credit unions
C. Acquired by firms B. payday loans
D. Jointly owned by two or more C. commercial banks

173. A 174. A 175. A 176. B 177. D 178. B 179. A 180. B 181. B 182. A 183. A
184. B
 25
185. The ratio is based on the princi- ple 190. How many banks are there in Brunei
that a high-risk investment should Darussalam (including the Islamic
generate higher financial returns for a Trust Fund)?
business and more conservative deci-
A. 6
sions often generate lesser returns.
B. 7
A. return on owners’ equity
C. 8
B. risk-return
D. 9
C. earnings
191. Which is the better APR for a credit
D. investment-to-equity
card?
E. quick return A. 10%
186. Analysis of Financial Statements is B. 20%
significant:
192. Sara is a working mother. She
A. For Creditors owns a condo in Washington DC and
B. For Managers doesn’t have a driver’s license because
she takes public transportation every-
C. For Employees where. What type of insurance does
D. For all of the above she NOT need?
A. disability
187. Financial leverage refers to the por-
tion of debt in the overall capital. B. health
A. True C. auto

B. False 193. Commercial banks are the largest

type of financial intermediary han-
188. calculate the amount of employee dling individual savings.
withholding for Social Security (6.2%)
and Medicare (1.45%) for Antoine
Fresher: $726.40
A. 55.55
B. 55.56
C. 55.57
D. 55.58

189. What are the three main types of

taxes?
A. Income, sales, and property
A. TRUE
B. Unemployment, sales, and prop- B. FALSE
erty
C. Federal income, unemployment, 194. Is the acquisition of a company over
and state the opposition of its management.
A. Corporate Raider
D. Sales, property, and unemploy-
ment B. Hostile Takeover

185. B 186. D 187. A 188. C 189. A 190. D 191. A 192. C 193. A 194. B
26 Chapter 1. Financial Management

C. Reverse Takeover A. Financial forecasting

D. Backflip Takeover B. Budgeting
C. Creating an income statement
195. These are activities related in the
generation of the principal revenue of D. Financial planning
the firm 200. Which of the following is a need?
A. Investing Activities A. Food
B. Financing Activities B. Expensive food
C. Smart phones
C. Operating Activities
D. Large house
D. All of the above
201. A business created as a distinct le- gal
196. You earn $300 a week and you are entity composed of one or more
able to save half of that each week. individuals or entities is called a:
You are saving money to go on a trip
A. Corporation
with your friends after you graduate
high school. the trip is going to cost B. Sole proprietorship.
$1,350. How many weeks will you C. General partnership
have to work to save enough money
D. Limited partnership
to go on the trip?
202. Felicia works 40 hours a week at the
A. 4 and a half weeks
moving company. She earns $ 12.00
B. 11 weeks per hour . For this pay period , Feli-
cia earned $480.00. Her deductions
C. 9 weeks were as follows: Federal Withholding
D. 7 weeks - $85.12; NC Tax - $ 52.19: FICA - $
47.68; and Uniform charge - $ 15.00.
197. Identifies the companies from which What was her NET pay?
credit purchase were made. A. $ 480.00
A. cash record B. $280.01
B. payroll record C. $ 199.99

C. accounts payable record 203. The process of keeping up with

something and keeping it in good con-
D. accounts receivable record dition
198. To protect a process,method or inno- A. purpose
vation one gets: B. credit card
A. Copy right C. maintenance

B. Patent 204. Which bank has the lowest fees for

the services they offer?
C. Trade mark
A. State Employees $1.00 checking
D. None of the above fee

199. is the process of setting financial B. Bank of USA $14.00 checking fee
goals and developing plans to reach C. Cherryville Savings & Loan $10.00
them. checking fee

195. C 196. C 197. C 198. B 199. D 200. A 201. A 202. B 203. C 204. A 205. B
 27
205. A financial document that summa- 210. A decision to acquire a new and
rizes a business’s income and ex- modern plant to upgrade an old one
penses over a given time period and is a
shows whether the business made a
A. financing decision
profit or took a loss.
B. working capital decision
A. balance sheet
C. investment decision
B. income statement
D. dividend decision
C. cash flow statement
D. accounting worksheet 211. Liabilities produce

206. All of the following are sources of A. Cash-flow

short-term funds EXCEPT B. Expenses
A. trade credit C. Stress
B. bank loans D. Trash
C. commercial paper
212. What are the 2 parts of a budget
D. bonds
A. Income and expenses
207. The target customer for a new book- B. Paychecks and Gifts
bag would be
C. Fixed and Flexible
A. teachers
B. librarians 213. Cash inflow = +

C. students A. EBIT + Depreciation

D. elderly people B. EBT + Depreciation

C. EBDIT + Depreciation
208. An agency of the federal govern-
ment that provides information, ad- D. EAT + Depreciation
vice, and assistance in obtaining
credit and other financial support for 214. Companies with higher growth po-
small businesses is the: tential are likely to pay-

A. SBA A. Lower dividend

B. FDA B. Higher dividend

C. FCC C. 50-50 dividend

D. EEOC D. Dividend are not affected by

growth considerations
209. Cami Bartosz calculated that she
owed taxes of $254 and had $278 215. Because of globalization in the
withheld from her pay during the year. world’s markets, a multinational finan-
This would result in cial manager is more likely than a do-
mestic financial manager to specialize
A. a refund of $278 in finance to the exclusion of other
B. a refund o $24 fields of business.
C. additional taxes owed of $254 A. True
D. additional taxes owed of $24 B. False

206. D 207. C 208. A 209. B 210. C 211. B 212. A 213. D 214. A 215. B 216. D
28 Chapter 1. Financial Management

216. A is a financial plan that reflects 221. Chris gets a monthly statement each
anticipated revenue and shows how it month to pay his
will be allocated in the operation of A. Barber
the business.
B. Credit Card
A. financial forecast
C. Debit card
B. financial plan D. Saving account
C. accounting equation
222. The form shows how much money
D. budget you made and how much you paid in
taxes from the previous year.
217. Given the following cash flows for
A. D-400
project A: C0 = -1000, C1 = +600 ,C2
= +400, and C3 = +1500, calculate the B. W-2
payback period. C. W-4
A. One year 223. when is financial leverage favorable?
B. Two years A. When return on investment is
C. Three years equal to cost of debt
B. when cost of debt is more than re-
D. "There is no spoon."
turn on investment
218. Which of the following comes under C. when equity is double to debts
the Traditional Methods of Capital D. when return on investment is
Budgeting higher than cost of debt
A. NPV
224. What is the formula for Current Ra-
B. PI tio?
Current Asset
C. IRR A. Current Liabilities
Current Liabilities
D. ARR B. Current Assets
− Current Assets Inventories
E. NTV C. Current Liabilities
− Current Liabilities Inventories
D. Current Assets
219. Owner’s equity is the owner’s claim
to the asset of the business. It is 225. A goal that is to be reached in 3
NEVER referred to as the owner’s cap- months to a year
ital in the business. A. Short term goal
A. True B. Medium term goal
B. False C. Long term goal
226. Which is NOT a financial perfor-
220. Mary works at the computer factory
mance ratio?
assembling mother boards. She can
assemble 40 mother boards in an 8 A. return on equity ratio
hour day. What is her hourly produc- B. debt to equity ratio
tion rate?
C. current ratio
A. 8 boards / hour
D. profit/loss ratio
B. 5 boards / hour
227. The total amount of income from
C. 4 boards / hour wages prior to taxes or deductions

217. B 218. D 219. B 220. B 221. B 222. B 223. D 224. A 225. B 226. D 227. A
 29
A. gross income A. sole proprietorship
B. net income B. franchise

C. income C. partnership

D. wages D. corporation

233. The "financial account" of the IMF’s

228. Current assets are also referred to
Balance-of-Payments Statistics mea-
as
sures the total financial wealth of citi-
A. Working capital zens in each reporting country.
B. Investments A. True

C. Inventory B. False

D. Livestock 234. Seema and her daughter went for

shopping is
229. Which of the following is not a key
component in the SMART concept for
goal setting?
A. Measurable
B. Time-bound
C. Specific
D. Aim

230. Which of the following types of in-

vestments would best protect the pur-
A. Saving
chasing power of a family’s savings
in the event of a sudden increase in B. Investment
inflation? C. Expenditure
A. A 10 year bond issues by a corpo- D. Income
ration
235. A typical income statement could
B. A certificate of deposit at a bank include the following:
C. A 25 year corporate bond A. revenue
D. A house financed with a fixed-rate B. cost of goods sold
mortgage
C. gross profit
231. Which of these is an example of reg- D. operating expenses
ular monthly income?
236. Which one of the following business
A. electric bill types is best suited to raising large
B. paycheck amounts of capital?

C. car bill A. sole proprietorship.

B. limited liability company
232. This is a business that is chartered
by the state; they are owned by stock- C. corporation
holders but run by the CEO. D. general partnership.

228. A 229. D 230. D 231. B 232. D 233. B 234. C 235. A 235. B 235. C 235. D
236. C 237. A 237. B 237. C
30 Chapter 1. Financial Management

237. Which of the following is/ are fixed 243. Needs of are being focused in
expenses? Marketing.
A. Insurance payments A. Customer
B. Rent B. Producer
C. House installments C. Retailer

D. Petrol expenses D. Wholesaler

E. Electricity bill 244. A prediction of the amount of future

sales your company expects to achieve
238. An amount of money an insurance over a certain period of time.
company pays to a person who has
A. budget forecast
previously deposited money with the
company is called a pension. B. sales forecast
A. True C. income prediction

B. False D. growth forecast

245. "Don’t put all your eggs in one bas-
239. A cash flow statement examines
ket" is investment advice related most
changes in the value of your personal
directly to:
assets.
A. liquidity
A. True
B. safety
B. False
C. growth
240. WHICH FOLLOWING CAN
D. diversification
INCREASE REVENUE ON AN
EVENTS 246. Businesses often buy property and
agree to pay for it later. All of these
A. Ticket Sales
purchases are considered debts. What
B. Fundraising term describes these pieces of prop-
C. Through Advertising erty, purchases, and accounts payable?

D. All above A. Accounts Payable

B. Credit Purchases
241. The exchange of one good or service
for another good or service refers to? C. Liabilities

A. Barter 247. In which of the following situations

would it be better to use a credit card
B. Money rather than incur debt using a loan?
C. Swindling A. Purchasing $500 dollars in gro-
D. Theft ceries
B. Purchasing a $5,000 car
242. What is the formula for POC? (Per-
cent of Completion) C. Purchasing a home for $125,000
A. POC = DOR/WIP D. Remodeling your home for
$15,000
B. POC = Actuals/EAC
248. True or False. A cash budget is an
C. POC = ETC/EAC
estimate of the actual money received
D. OC = GOP/Direct Cost and paid out for a specific period.

238. B 239. B 240. D 241. A 242. B 243. A 244. B 245. D 246. C 247. A 248. A
 31
A. True A. financing decision
B. False B. investment decision
249. Calculate the amount to save each C. dividend decision
month to purchase a $50 gift for a
D. financial decision
friend in two months.
A. $20.00 255. Ratio Analysis used to determine:
B. $25.00 A. Financial strength
C. $50.00 B. Financial activity
250. Liabilities are C. Bill paying ability
A. what a company owes D. All of the above
B. the value of the owners’ investment
E. None of the above
in the company
C. what a company owns 256. Your net worth is
D. what a company has on hand to A. the total value of your personal
sell assets.
251. is the system of recording busi- B. the difference between your per-
ness transactions, and analyzing, veri- sonal assets and your liabilities.
fying, and reporting the results.
C. the total amount of all of your in-
A. Accounts receivable vestments.
B. Accounting D. what you have left over in your
C. Generally accepted accounting paycheck each week after deductions
principals (GAAP) are taken out.

D. Fixed assets 257. which type of methods of capital

budgeting is regarded as the Dis-
252. What is ignored in profit maximisa-
counted Cash Flow Techniques
tion?
A. Dividend A. Traditional Methods

B. Time value B. Modern Methods

C. Risk C. Both of them
D. Earnings D. None of them
253. Balance the equation. Liabilities = 258. Financial analysis become useless
$500; Owner’s Equity = $450. What because it:
must assets equal?
A. Measures the profitability
A. $50
B. Measures the Solvency
B. $950
C. $500 C. Lacks Qualitative Analysis

D. $450 D. Makes a comparative study

254. Market value of shares is influenced 259. Shareholder’s current wealth in a

by company = × .

249. B 250. A 251. B 252. B 253. B 254. D 255. D 256. B 257. B 258. C 259. C
32 Chapter 1. Financial Management

A. Face value of shares × Market 264. What type of restaurant serves low-
price per share priced food in a very casual atmo-
sphere with little to no table service?
B. Number of shares × Face value of
shares A. Casual dining
C. Number of shares × Market price B. Fast food
per share C. Fine dining
D. Number of shares × Profit per 265. Fluctuations that have a periodicity of
share more than a year and vary in length
260. The basic format of an income state- from one cycle to the next, the mean-
ment is ing of

A. Sales - Expenses = Profits A. Trend Component

B. Income - Expenses = EBIT B. Seasonality Component

C. Cyclical Component
C. Sales - Liabilities = Profits
D. Irregular Component
D. Assets - Liabilities = Profits
266. All of the decisions and activities of
261. What is G on the check? an individual or a family regard- ing
their money, including spending,
saving, saving, and budgeting.
A. personal finance
B. financial mangement
C. cash flow analysis

A. purpose of the check 267. A drop in enrollment at a public in-

stitution would likely affect the current
B. account number fiscal year.
C. amount of check in words A. True
262. Mrs. Thomas wants to save $4000 B. False
over the next 3 years to pay for
268. The part of the time series that can-
new carpet and painting in her home.
not be explained by any of the above
How much will she need to save each
components, and is assumed to be
month in order to reach her goal?
random, the meaning of
A. $1333.34 A. Trend Component
B. $111.12 B. Seasonality Component
C. $333.34 C. Cyclical Component
263. Companies with higher growth po- D. Irregular Component
tential are likely to
269. Inflation in one country has no ef-
A. pay lower dividends fect on other countries.
B. pay higher dividends A. True
C. dividends are not affected by B. False
growth considerations
270. It is better to hold stock (inventory)
D. none of these for as long as possible. True of false

260. A 261. B 262. B 263. A 264. B 265. C 266. A 267. B 268. D 269. B 270. B
 33
A. True 276. . When a company uses increased
fixed cost for production, this is an
B. False
example of what type of leverage
271. A report card measuring the direc- A. operating leverage
tion of your wealth.
B. financial leverage
A. Financial Statement
C. variable cost leverage
B. Cash-flow
D. combined leverage
C. Asset
277. Financial management helps in
D. Liability
A. the estimation of total requirement
272. January 1 through December 31. of funds and monitoring effective de-
ployment of funds in fixed assets and
A. fiscal year
working capital
B. calendar year
B. long term planning of company’s
C. 365 day earth year activities
D. business year C. profit planning for the organisa-
tion
273. Which is a "Long-term Financial
Goal"? D. short term planning

A. Buying gifts for your friends 278. For quote GBP/SEK 6.4750-6.4850;
% spread is
B. Going in vacation to Pennsylvania
A. 0.01%
C. Retirement
B. 0.1534%
D. College
C. 0.1544%
274. If the depreciation amount is
D. 0.1454%
$100,000 and the marginal tax rate is
35%, then the tax shield due to depre- E. Not aware of
ciation is:
279. Investment Decision is also called
A. $35,000
A. capital budgeting
B. $100,000
B. Current Decisions
C. $65,000
C. Working capital decisions
D. None of the above
D. All Above
275. Which of the following statements is
correct? 280. Main limitation of financial analysis
is :
A. if PI< 1, its NPV is less than zero
A. To know earning capacity
B. if PI= 0, its NPV is greater than
B. To know financial strength
zero
C. Do not reflect changes in price
C. if PI > 1, its NPV will be negative
level
D. None of the above
D. Comparative study with other
E. None of the above firms

271. A 272. B 273. C 274. A 275. A 276. A 277. A 278. C 279. A 280. C 281. B
34 Chapter 1. Financial Management

281. Jerry’s gross pay for this pay period 286. A schedule of how much producers
was $525.00. He had the following are willing and able to produce and
deductions taken from his pay check ( sell at a price
Federal Income Tax $78.75, State In-
A. Profit
come Tax $36.75, FICA $40.16). What
is his net pay? B. Services
A. $525.00 C. Supply
B. $369.34 D. Demand
C. $155.66
287. Which of the following is the correct
282. an employee that generates their in- sequence of capital budgeting
come from commission only A. Project generation, project screen-
A. quota ing,project selection,project imple-
mentation,project review and project
B. graduated commission evaluation
C. straight commission B. Project Screening, Project Genera-
283. Measures the percentage of total dol- tion, Project Evaluation, Project Selec-
lars in the business provided by credi- tion, Project Implementation, Perfor-
tors mance Review

A. Current Ratio C. Project Generation, Project Screen-

ing, Project Evaluation, Project Selec-
B. Quick Ratio tion, Project Implementation and Per-
C. Debt Ratio formance Review

D. Net Profit on Sales Ratio D. Project Generation, Project Eval-

uation, Project Screening, Project Se-
E. Operating Ratio lection, Project Implementation, and
performance Review
284. Working capital refers to that part of
total capital which is required for hold- 288. Your credit card bill will show all
ing fixed assets . it may also be de- of the transactions made for that
fined as excess of current assets over month’s billing cycle.
current liabilities.
A. True
A. True
B. False
B. False
289. John wants to budget 20% of his in-
285. ’A Ltd.’ has debt @22% p.a. in its
come for savings. If he makes about
capital structure but ’K Ltd.’ has debt
$1,600 each month, how much of his
@15% p.a. in its capital structure. EPS
budget will be savings?
of both companies is 20%. Which com-
pany will enjoy the benefit of trading A. $160
on equity.
B. $320
A. A Ltd.
C. $400
B. K Ltd.
290. The itemized summary of probable
C. Both
expenditures and income for a given
D. None period of time is called:

282. C 283. C 284. B 285. B 286. C 287. C 288. A 289. B 290. D 291. A
 35
A. interest A. to maximize the return
B. investments B. to minimize the risk
C. expenses C. to maximize wealth of owners
D. budget D. to maximize profit
291. Commercial papers
296. A company’s financial plan should
A. Short term debt answer all of the following questions
B. Long term debt EXCEPT
A. What is the contingency plan in
292. In the grocery store, the food dis-
case of bankruptcy?
plays at the end of the aisle are the
best buys. B. What funds will the firm require
A. Fact during the appropriate period of op-
erations?
B. Fiction
C. How will it obtain the necessary
293. What method of Promotion is this? money?
D. When will it need more cash?

297. Financial management function that

managing the funds earned from ac-
tive spending is called
A. Planning function of funds
A. Advertising B. Obtaining of funds
B. Personal Selling C. Allocation of funds
C. Sales Promotion D. Earned of funds
D. Public Relations
298. The capital structure of a com-
294. Below are the reasons business pany consists of the following secu-
needs finance EXCEPT : rities:Equity share capital of Rs. 10
A. Give business ownership to others each Rs. 1,00,0008% Debentures
RS. 1,00,00010% Preference shares
Rs. 1,00,000The amount of operat-
B. Enter new market ing profit is Rs. 60,000. The tax rate
C. Moving to new premises applicable to the company is 50%.You
are required to calculate the financial
D. Pay do to day business operation leverage of the company
295. The primary goal of financial man- A. 1.234
agement is
B. 1.524
C. 1.352
D. 1.154

299. A belief of idea that you consider

important or valuable

292. B 293. B 294. A 295. C 296. A 297. C 298. D 299. C 300. A

36 Chapter 1. Financial Management

A. Goal A. 1040EZ
B. Objective B. W-4

C. Value C. W-2

D. Need 305. If you work just for money, you’ll

never make it, but if you love what
300. What has the same meaning as pos- you’re doing and you always put the
itive cash flow? customer first, success wil yours. - Ray
Kroc
A. Surplus
A. Competitive Advantage
B. Deficit
B. Profit
301. Select the FOUR types of Financial
306. Your birth certificate and Social Se-
Institutions curity card would likely be contained
A. Your piggy bank in which category of your financial
records filing system?
B. Commercial Banks
A. money management records
C. Credit Unions
B. housing records
D. Payday Loans C. personal records
E. Savings and Loans D. tax records
302. An accounts receivable record iden- 307. What does the accounts receivable
tifies the companies from which credit turnover ratio measure?
purchases were made and the amount
A. Profitability
purchased, paid and owed.
B. Gearing
A. True
C. Efficiency
B. False
D. Liquidity
303. What is mobile banking? 308. Jill earned $220 gross income last
A. An electronic way to view account month. She had to pay $13 for pay-
activity and pay bills via the internet roll tax and $27 for income tax. How
and an institution’s website. much was Jill’s net income?

B. A written order for a bank to pay A. $260

money out of the account holders ac- B. $193
count. C. $180
C. A record of income and spending D. $40
and a plan for managing money.
309. The process of managing the sales
D. A wireless service that allows fi- ledger of a client by a financial service
nancial transactions by using an app companyis called
or web browser from a mobile device.
A. Forfeiting
304. John is single, 20 years old, and B. Factoring
makes less than $100,000 a year. He
has no children. Which federal tax C. Leasing
form should he use? D. Securitization of debt

301. B 301. C 301. D 301. E 302. B 303. D 304. A 305. A 306. C 307. C 308. C
309. B
 37
310. The correct sequence of Five As of A. $ 29.78
Financial Management is
B. $ 88.52
A. Appropriation, Assessment, Acqui-
C. $ 39.56
sition, Allocation and Anticipation
B. Allocation, Appropriation, Assess- 315. Publicity refers to -
ment, Acquisition and Anticipation A. Non paid form of impersonal com-
munication
C. Acquisition, Allocation, Appropri- B. Paid form of impersonal communi-
ation, Assessment and Anticipation cation
C. Non paid form of personal com-
D. Anticipation, Acquisition, Alloca- munication
tion, Appropriation and Assessment
D. Paid form of personal communica-
311. If you withdraw cash from tion
an ATMwith your Credit Card, what
happens? 316. Brian is finishing a meal at his fa-
vorite restaurant. The check shows
A. The grace period will begin.
the cost of the food is $42. He adds
B. Interest will start to be charged a 15% tip to the amount on the check.
right away. What is the total amount Brain paid?

312. Before making a loan, banks require A. $49.00

that the prospective borrower: B. $58.50
A. make a substantial deposit in the C. $48.30
bank
D. $48.00
B. provide collateral even if the loan
is very small with low risk 317. Breaks down the revenue a company
C. provide financial evidence to show earns against the expenses involved in
that the loan can be repaid its business to provide a bottom line,
net income profit or loss.
D. show that all the business’s cash
has been used A. Balance Sheet
B. Income Statement
313. Money you receive before taxes is
called: C. Cashflow Statement
A. gross income D. Statement of Changes in Equity
B. net income 318. most unsafe mode by which firms
C. pay day perform worldwide business is

D. bank loan A. Licencing

B. Franchising
314. How much is deducted from Daisy’s
check for FICA? C. International trade
D. Establishment of new subsidiaries

319. Select all of the LONG term goals

listed below:

310. D 311. B 312. C 313. A 314. A 315. A 316. C 317. B 318. D 319. A 319. C
319. D 320. A
38 Chapter 1. Financial Management

A. Buying a house A. Net profit margin

B. Buying a pair of shoes B. Financial leverage multiplier
C. Buying a car C. Asset turnover
D. Paying for college D. Current ratio

320. Charitable contributions can be de- 326. Employee are the only ones that pay
ducted from taxable income. Social Security and Medicare taxes.
A. True A. True
B. False B. False
321. A cash budget is a plan for the 327. In ratio analysis, the financial state-
amount expected to be spent and ments being used for comparison
earned over a given period of time. should be dated at the same point in
A. True time during the year. If not, the effect
of seasonality may produce erroneous
B. False conclusions and decisions.
322. Kyle made a down payment of A. True
$850 towards his car loan. He will
B. False
be paying $415 every month for 24
months.What will the car cost Kyle in 328. There is little evidence that devel-
total? oping a business plan has any impact
A. $9,960 on whether a new business fails or
succeeds.
B. $10,810
A. True
C. $11,660
B. False
323. Testing and evaluating a business’s
accounting processing and internal 329. Bond by the name of the owner of
control is called the issuing company is?
A. Accounting processes A. Debenture
B. Auditing B. Mortgage
C. Cash flow Management C. Convertible
D. Record Keeping D. Registered

324. The budget shifts the focus from 330. In situations of Capital Rationning
minute details of the line-item budget , method is mostly preferred for
to goal setting and service delivery. Capital Budgeting
A. performance A. NPV
B. lump-sum B. IRR
C. program C. PI
D. zero-based D. ARR

325. Which of the following is not an inte- 331. The decision function of financial
gral component of ROE computation management can be broken down into
under the DuPont Ratio Analysis. the decisions.

321. B 322. B 323. B 324. C 325. D 326. B 327. A 328. B 329. D 330. C 331. B
 39
A. financing and investment A. Saving 3 months for a new cell
phone.
B. investment, financing, and asset
management B. Saving 2 years for a new car.
C. financing and dividend C. Saving 15 months for tuition at the
community college.
D. capital budgeting, cash manage-
ment, and credit management D. Saving 4 months to buy your
mother a present.
332. Which statement best defines the E. Purchasing a new refrigerator with
term principal? your credit card.
A. It is an arrangement in which you 338. Financial Leverage arises because of
buy now and pay later.
A. Fixed cost of production
B. It is the annual rate of interest a
bank charges for a loan. B. Fixed Interest Cost
C. Variable cost
C. It is the original amount of money
the bank loans the borrower. D. None of the above
E. None of the above
333. Sales and profits for a specific time
period are reported on the income 339. The process of good money manage-
statement. ment should start with knowing your
A. True current financial status.

B. False A. True
B. False
334. identifies your individual account
340. Which theory is also known as Fixed
A. routing number ’ke ’ theory
B. account number A. Traditional Theory
C. Check number B. Modigliani - Miler Theory
D. Date C. Net Income Theory

335. use the basic financial equation to D. Net Operating Theory

determine the profit or loss: revenue 341. Total assets less net fixed assets
729,655; expenses 499,220 equals
A. 230435 profit A. gross assets
B. 230435 loss B. current assets

336. A business will make a profit if C. depreciation

D. liabilities and equity
A. revenue equals expenses
B. assets equal liabilities 342. In what numbered section of the bill
should John look to find his account
C. revenue is greater than expenses summary?
D. expenses are greater than revenue A. Section 1

337. Choose all of the choice s that rep- B. Section 3

resent a Long Term goal. C. Section 5

332. C 333. A 334. B 335. A 336. C 337. B 337. C 338. B 339. A 340. C 341. B
342. B 343. C
40 Chapter 1. Financial Management

343. Current assets of a business firm A. Spending

should be financed through
B. Investing
A. Current liability only C. Saving
B. Long term liability only D. Donating
C. Partly from both types long and
349. TWO (2) sources to finance the as-
short term liabilities
sets are borrowing and capital
D. By profits only
A. TRUE
344. Insurance B. FALSE

350. Funds raised from this source dilutes

management’s holding
A. retained earnings
B. debentures
C. equity shares
A. Revenue D. preference shares
B. Expense
351. What does it mean when a student
345. Which analysis is considered as loan is "forgiven"?
static : A. You get a letter of apology from
the government
A. Horizontal Analysis
B. You don’t have to keep going to
B. Vertical Analysis
classes to get your degree
C. Internal Analysis
C. You don’t get as much money as
D. External Analysis your were previosuly promised

346. The year is the budget cycle year, D. You don’t have to pay back the
often July 1 through June 30. remainder of your loan debt

A. bond 352. An income statement typically cov-

ers
B. capital
A. two years.
C. operating
B. one week.
D. fiscal
C. a year.
347. A(n) would be an example of a prin- D. five years.
cipal, while a(n) would be an example
of an agent. 353. Mateo gets an email from an address
he doesn’t recognize asking him to
A. shareholder; manager
send money. It is a young student
B. manager; owner who is stranded overseas and doesn’t
have enough money for a plane ticket.
C. accountant; bondholder
Should Mateo send the money?
D. shareholder; bondholder
A. Yes
348. We bought a second home to rent. B. No

344. B 345. B 346. D 347. A 348. B 349. A 350. B 351. D 352. C 353. B 354. A
 41
354. Chelsea charges customers $150 to 360. Which of the following would prob-
fix an iphone. She pays $40 for each ably be a short-term financial goal?
replacement screens she puts on a
A. going on a three-week cruise
phone. What is her profit from fix-
ing one iphone? B. buying a new luxury automobile
A. $110 C. going to college
B. $190 D. purchasing a new CD

C. $600 361. The arbitrary dollar value assigned

to shares of stock when they are issued
D. $150
is:
355. What does FICA do? A. Book Value
A. Help older Americans with insur- B. Market Value
ance and income
C. Par Value
B. Help tax payers with hourly rates
362. A payroll is the financial record of
C. Help individuals save for trips
employee compensation, deductions,
356. True or False: Life insurance will and net pay.
help cover funeral costs when a per- A. True
son dies.
B. False
A. True
363. The examples of liabilities are
B. False

357. An example of open credit is

A. a student loan
B. an auto loan
C. a credit card
D. a debit card

358. An empty jar can help me with this

situation.
A. spending
A. bank loans, credit card bills, un-
B. saving settled rent, utilities bills
C. donating B. fixed deposits, unit trust, company
D. investing shares
C. cash, savings, real estate invest-
359. John wants to buy a $5,000 car. He ments
plans to buy it in 3 years. How much
should he save each month to pay for 364. What is the third step in the financial
the car? planning process?
A. $1,666.67 A. Gather personal information
B. $138.89 B. Establish goals and objectives
C. $208.33 C. Process and analyze information

355. A 356. A 357. C 358. B 359. B 360. D 361. C 362. A 363. A 364. C 365. B
42 Chapter 1. Financial Management

365. An audit is a collection, recording, A. $850.

and reporting of financial transac-
B. $870.
tions.
C. $1,500.
A. True
D. $1,520.
B. False
370. A portfolio is
366. Financial institutions are also known
as A. Weighted average of squared devi-
ations
A. Financial organisation
B. A collection of assets
B. Financial intermediaries
C. Financial system 371. Dividend decision is concerned with

D. All of the above A. only distribution of dividend to

shareholders
367. The table below shows Steven’s ex-
B. how much to be retained in busi-
penses in a month. Calculate the total
ness
expenses and total variable expenses
of Steven. C. how much profit earned is dis-
tributed to shareholders and how
much to be retained in the business
D. none of the above

372. Alice earned $622.50 in interest on

her savings in the bank. Before inter-
est, the account had $12,450. What is
A. Fixed expenses: RM 1220 Variable the approximate percent she earned
expenses: RM1115 in interest?

B. Fixed expenses: RM 1200 Variable A. 3%

expenses: RM1135 B. 5%
C. Fixed expenses: RM 1150 Variable C. 7%
expenses: RM1065
D. 10%
D. Fixed expenses: RM 1270 Variable
expenses: RM1065 373. is the total amount of money
owed to a business
368. What is the second step in the finan-
A. Accounts payable
cial planning process?
B. Accounts receivable
A. Gather personal information
C. Fixed assets
B. Establish goals and objectives
D. Equity
C. Process and analyze information
374. Work that is done for others is what
369. This month Anthony’s take-home
type of business organization?
pay was $1,500. He also earned $20
interest on a savings account. He A. service business
spent $250 for rent, $100 for groceries, B. retail business
and $300 for other expenses. An-
thony’s net cash flow this month to- C. business plan
taled D. blueprint

366. B 367. A 368. B 369. B 370. B 371. C 372. B 373. B 374. A

 43
375. The term used to describe the pro- 379. Which is needed to evaluate finan-
cess of determining how a firm should cial status?
allocate scarce capital resources to
available long-term investment oppor- A. Financial goal
tunities, is the meaning of B. Assets
A. Capital Budgeting
C. Cash flow
B. Capital Structure
D. Total income
C. Working Capital
D. Cost of Capital 380. A credit card company usually has
a grace period for purchases. A grace
376. Use the W-2 above to answer ques- period is
tion. How much money did Jackson
make last year? A. the time period after you make a
purchase until the time the interest
starts to get charged.

B. the time period where interest

builds on the amount you purchased.

381. The process of measuring present

value from a future amount is called

A. $25,304.90
A. Discounting
B. $1,255.60
B. Compounding
C. $7,236.86
C. All of the Above
377. What is the advantage of a bank over-
draft for a business? D. None of the Above
A. Interest rates are usually lower and
more variable than mortgage loans. 382. Net income is:

B. Interest rates are usually higher A. the total amount of money you
and unlimited finance is available at earn
very short notice.
B. the amount of money you receive
C. Finance is available at short notice after deductions are subtracted from
and is preapproved. your gross income
D. Interest rates are fixed and repay- C. the amount of money that is taken
ment can be delayed. away in the form of taxes
378. Long-term, forward-looking ap- D. the hourly rate of pay
proach to planning with the funda-
mental goal of achieving a sustainable 383. This is the way you sign your name
competitive advantage.
A. check
A. Advertisement
B. Marketing B. deposit

C. Marketing Plan C. sloppy words

D. Marketing Strategy D. signature

375. A 376. A 377. C 378. D 379. B 380. A 381. A 382. B 383. D

44 Chapter 1. Financial Management

384. Common stockholders received 388. is certainly a contributing factor

fixed dividends, and have higher prior- as Marci now must pay some of her
ity than priority than preferred stock- employees a higher wage.
holders in event of liquidation of the
A. Decreased labor cost
firm.
B. Increased labor cost
C. Increased benefits
D. Increased revenue

389. You pay all of your house bills on

time, but you miss a credit card pay-
ment 2 time. Will your credit score go
up or down?
A. True A. Stays the same
B. False B. Down

385. PETROL EXPENSES, GROCERIES, C. Up

ALLOWANCE FOR PARENTS ARE :
390. Financial Literacy is having the
knowledge, understanding, and skills
necessary to become an effective con-
sumer.
A. True
B. False
A. FIXED EXPENSES
391. Pay for working more than 40 hours
B. VARIABLE EXPENSES in one week is called?

386. You buy 6 pairs of socks for $10.98, A. Net pay

what is the unit price? B. Gross Pay
A. $1.83 C. Pay period
B. $1.85 D. Overtime pay
C. $1.90
392. The is the long-range govern-
D. $1.38 ment financial plan typically used to
fund construction projects, road con-
387. Sunita calls her friend Suman and re- struction, and land acquisition.
quests her to sell one of her paintings
to Rama’s mother. In this transaction A. operating budget
who is the marketer B. recommended budget
A. Sunita C. adopted budget
B. Suman
D. capital improvement budget
C. Both
393. If you are required to take out a loan,
D. None which loan should you aim for?

384. B 385. B 386. A 387. A 388. B 389. B 390. A 391. D 392. D

 45
397. Used to borrow money to gain some-
thing you cannot afford at one time
A. debit card
B. credit card
C. check
D. cash

398. The main source of financial infor-

mation established businesses use to
prepare a budget is
A. the company financial records
B. Small Business Administration
C. The Wall Street Journal
A. Plus Loan
D. accountants and bankers
B. Unsubsidized
399. The contract evidencing the exis-
C. Subsidized
tence of partnership
D. Private Loan
A. Service Contract
394. Underwriting of shares by a financial B. Articles of Partnership
intermediary is a kind of activity.
C. Articles of Incorporation
A. Cash Based
D. Contract of Partnership
B. Fund Based
C. Time Based 400. The amount of money left over after
taxes are taken out is called
D. All of these
A. Gross Income
395. Why do currency fluctuations repre-
sent a financial risk to business? B. Net Income

A. Interest rates can increase without 401. You’ve got to look for a gap, where
warning. your competitors in a market have
B. Conversion from one currency to grown lazy and lost contact with the
another can result in lower revenue reader or the viewers. - Rupert Mur-
and higher expenses. doch

C. International banks impose trans- A. Competitive Advantage

action fees. B. Profit
D. Tourists will require more spend-
402. True or False. Businesses are respon-
ing money.
sible for making required federal and
396. What do the following words have state payments for each employee.
in common: Shoes, Tickets, Food A. True
A. They’re are all needs B. False
B. They’re are all wants
403. Fred & Jane’s gelato bar uses an over-
C. They all cost money draft to supplement its cash flow in
D. They’re all free the winter season. An overdraft is:

393. C 394. B 395. B 396. C 397. B 398. A 399. B 400. B 401. A 402. A 403. A
46 Chapter 1. Financial Management

A. available through their cheque/cur- A. depreciated value

rent account facility
B. replacement value
B. part of their equity financing C. asset book value
C. provided through their insurance D. depreciation expense
company
409. A decision to acquire a new and
D. a long-term solution to their prob-
modern plant to upgrade an old one
lem
is
404. A business should locate in an A. Investments decision
area with access to raw materials and
transportation systems B. Financing decision
C. Dividend Decision
A. Retail
D. Working Capital decision
B. Manufacturing
C. service 410. Private student loans have better in-
terest rates than government student
D. wholesale loans
405. When a business expands new facto- A. True
ries and equipment may be needed. B. False
A. True
411. Personal financial
B. False management is a daunting and
continuous task that can cause even
406. Major goal of the firm are the most economically savvy
A. Stockholder wealth maximization , individual to become confused or
Maximize sale short-sighted.

B. Social responsibility, Avoid finan- A. True

cial distress B. False
C. Social responsibility, Stockholder 412. Karen makes $1,000 a month work-
wealth maximization ing at Bojangles. She pays $450 in
D. Stockholder wealth maximization, rent. How much money does she have
Minimize cost per month after paying her rent?
A. $500
407. Wealth in the form of money or
other assets owned by a person or or- B. $450
ganization or available or contributed C. $550
for a particular purpose such as start-
ing a company or investing. 413. A report of a company’s financial
worth in terms of book value. It is bro-
A. Consumer
ken into three parts to include a com-
B. Seller pany’s assets, liabilities, and share-
holders’ equity.
C. Capital
A. Balance Sheet
D. Demand
B. Income Statement
408. The original cost of an asset, less its
accumulated depreciation, is called its C. Cashflow Statement
D. Statement of Changes in Equity

404. B 405. A 406. C 407. C 408. C 409. A 410. B 411. A 412. C 413. A 414. B
 47
414. True or False?Email is an example of
indirect marketing.
A. True
B. False

415. Accounting is often called the lan-

guage of 420. A. Asset
A. communication B. Liability
B. business C. Expense
C. finance D. Cash-flow
D. math 421. What are the only two ways to fi-
nance a firm?
416. which one is not a factor affecting
working capital requirements A. By the owner’s funds or funds from
relatives
A. Production cycle
B. By government grants or tax subsi-
B. Seasonal factors dies
C. Business cycle C. By selling assets or taking on a
D. Financing alternative bank loan

E. Availability of raw material D. By raising equity or taking on debt

417. Bank statements are compared to the 422. Long-term debt instruments used
check register when this account. by both government and business are
known as
A. depositing slip
A. bonds
B. reconciling
B. equities
C. check registering
C. stocks
D. checking
D. bills
418. Which of the following is not one 423. Capital Expenditures are long term
of the most important elements of a commitments of large sums of money
company’s financial strength? to buy new equipment or replace old
A. assets equipment.
B. owner’s equity A. True

C. payroll B. False

D. liabilities 424. Ensuring that the fund to be invested

will create value to a business or an
419. Which of the following is a want individual in the form of profit.
A. McDonald’s food A. Finance
B. Sheetz food B. Evaluating Investments
C. Dunkin’ Donuts food C. Financial Management
D. All of these D. Financial Institution

415. B 416. D 417. B 418. C 419. D 420. C 421. D 422. A 423. A 424. B
48 Chapter 1. Financial Management

425. How much is Puan Sofia’s monthly

saving if she wanted to pay the down
payment for a RM650 000 house in
six years?
A. RM1111.78
B. RM900.00
C. RM1000.78
A. users; suppliers
D. RM902.78
B. purchasers; sellers
426. If NPV is Negative , Projects can be
C. suppliers; users
D. users; buyers
A. Accepted
B. Postponned 431. Taxes must be filed by what date?
A. Jan 1
C. Rejected
B. Jan 31
D. Aggregated
C. May 1
427. Amount (1+r)n is the formula for cal-
D. April 15
culating
432. Setting aside an amount of money
A. Current Value
for later use
B. Earned Value
A. Pay yourself first
C. Future Value B. Income
D. Present Value C. Budget
428. Everyone involved in a business D. Cash flow
should understand some of the basics
433. The decision which affects the capi-
of accounting.
tal structure of a company is
A. True A. dividend decision
B. False B. investment decision
429. Which choice is classified as politi- C. financing decisions
cal risk factors? (You can choose more D. all
than one choice )
A. Currency Inconvertibility
B. Recession
C. Corruption
D. War

430. The key participants in financial

transactions are individuals, busi- 434. A. Real Estate Property
nesses, and governments. Individuals
B. Intellectual Property
are net of funds, and businesses
are net of funds. 435. Which is not a need?

425. D 426. C 427. C 428. A 429. A 429. C 429. D 430. C 431. D 432. A 433. C
434. A 435. B
 49
A. food 441. You participate in competition and
B. designer clothes win prize

C. a job
D. money
436. What is the total amount due for this
bill?
A. $98.92
B. $181.00
C. $252.00
A. Saving
437. Which of the following is NOT a lim- B. Investment
itation of Payback Period method
C. Income
A. Ignores Time Value of Money
B. Ignores post payback profitability D. Expenditure

C. Ignores the Rate of Return Calcu- 442. Techniques for measuring Time
lation Value of Money includes
D. Considers Liquidity A. Discounting
438. Which statement describes a car B. Compounding
lease?
C. All of the Above
A. You get to use a car for a spe-
cific time period by making daily pay- D. None of the Above
ments.
443. Which person below would pay more
B. You get to use a car for a specific for car insurance?
time period by making monthly pay-
ments. A. 17-year old boy

C. You pay monthly installments, and B. 50-year old woman

own the car after you pay your last
installment. 444. True or False: Life insurance will
help cover funeral costs when a per-
439. Current assets of a business firm son dies.
should be financed through
A. true
A. a long-term liability
B. false
B. a short term liability
C. partly from both types i.e. long 445. The study of banking and money in
and short term liabilities this unit is called

D. none of these A. Banking Literacy

440. what is research B. Money Literacy

A. search C. Math literacy

B. again and again D. Financial Literacy
C. finding hidden facts 446. Your job must send you the W-2 by
D. all of the above what date?

436. B 437. D 438. B 439. C 440. D 441. C 442. C 443. A 444. A 445. D 446. B
50 Chapter 1. Financial Management

A. Jan 1 A. Stability of dividends

B. Jan 31 B. Taxation policy
C. April 15 C. Risk
D. Dec 25
D. Shareholders preference
447. E-filers are issued a Personal Iden- E. Stability of earnings
tification Number or allows the
taxpayer to "sign" the return electron- 453. Which among the following is not
ically. an element of marketing mix -
A. 1040EZ A. Product
B. PIN
B. Price
C. D-400
C. Place
448. A is a monthly plan that helps
D. Advertising
you use your money correctly in or-
der to pay all your bills and still have 454. All assets purchased by the firm
money left over for savings or emer- can be financed in three ways, which
gencies. are short-term financing, long-term
A. Budget financing and
B. Income
C. Economics
D. Savings

449. Material will vary from job-to-job,

so that is a
A. fixed costs
B. labor issue
C. supply issue
D. variable expense A. immediate financing.

450. A schedule of how much consumers B. spontaneous financing.

are willing and able to buy at a price
C. impulsive financing.
A. Needs
D. temporary financing.
B. Wants
455. Budget cuts that take place immedi-
C. Supply
ately are less painful than budget cuts
D. Demand that take place over the course of two
to three years.
451. Treasury bonds
A. True
A. Short term debt
B. Long term debt B. False

452. Which one is not a factor affecting 456. Which of the following is one of the
dividend decision steps in creating a budget?

447. B 448. A 449. D 450. D 451. B 452. C 453. D 454. B 455. B 456. A
 51
A. Record expenses, listing needs A. expenses
first then wants. B. revenue
B. Create a spending chart for special
462. A cash budget is an estimate of the
events like birthdays and holidays.
actual money received and paid out
C. Create a table for cash gifts and for a specific period.
gift cards you receive. A. True
457. The concept that increases the re- B. False
turn on equity shares with the change
463. Yuko added a 15 percent tip when
in capital structure of a company
she paid her cab driver. If the fare was
A. Trading on debentures $25.50, what was the total amount she
B. Trading on equity paid?
A. $28
C. capital budgeting
B. $30
D. financial planning
C. $31
458. Short-term financing not backed by
464. Removal of cyclical effects on rev-
collateral is called
enue or a one-off occurrence in re-
A. Trade Credit ports is called:
B. Secured Loan A. capitalising expenses
C. Debt Capital B. normalised earnings
D. Unsecured Loan C. fraud
D. timing issues
459. Which are classroom rules?
465. Net Woking capital refers to
A. Do your best
A. Total current Assets
B. Do not forget to ROAR
B. Current Asset + Current Liabilities
C. Come to class prepared
D. Follow directions C. Current Assets - Current Liabili-
E. Cell phones can be out ties
D. Current Liabilities - Current As-
460. Is hence the handling of all financial sets
matters, and this includes analyzing
financial statements, evaluating invest- 466. Non-banking companies should
ment opportunities which happens be- compulsorily get credit rating for their
fore one actually starts investing, and
raising capital or funds from different A. capital market instruments
sources.
B. money market instruments
A. Finance
C. debt market instruments
B. Evaluating Investments
D. none of these
C. Financial Management
467. Treasury Notes
D. Financial Institution A. Short term debt
461. The costs of operating a business. B. Long term debt

457. B 458. D 459. A 459. B 459. C 459. D 460. C 461. A 462. A 463. B 464. B
465. C 466. C 467. B 468. A
52 Chapter 1. Financial Management

468. Profitability Index method is an ex- 473. Several techniques are commonly
tension of used as part of financial statement
analysis. Three of the most important
A. NPV
techniques include horizontal analysis,
B. IRR vertical analysis, and ratio analysis.
C. Payback Period A. True
D. ARR B. False
E. None of the above 474. Calculate the missing amount for A:
Net Worth
469. Mr Smith earns RM 3 500 a month.
Every month, his fixed expenses is
RM 1 300 and variable expenses is
RM 400. He also rent out his other
house for RM 450 a month. Calculate
his monthly cash flow.
A. RM 1 350
B. RM 2 250 A. $8,800
C. RM 4 750 B. $19,000
D. RM 5 650 C. $10,200
D. $6,000
470. Profitability can be defined as:
A. The greater the risk, the greater 475. Which one of the following is true
the required rate of return A. People are the most valuable as-
B. The extent to which the assets of set to any company and are therefore
the business exceeds its liabilities posted on the balance sheet
B. Employees are never on the bal-
C. The ability of the business to sat-
ance sheet
isfy its short-term obligations
C. It is hard to valuate your employ-
D. The ability of the business to gen-
ees therefore they tend to NOT be on
erate income that will exceed costs
the balance sheet
471. With personal financial skills people D. Employees are not on the balance
usually spend their entire lives slaving sheet since they unions do not want
for money, always in debt, never able them to be
to catch up and get ahead
476. Gas
A. True
B. False

472. William is an executives who devel-

ops and carries his firm’s financial
plan and decides on the most ap-
propriate sources and uses of funds.
What is his position in the firm?
A. Financial Manager A. Revenue
B. Accountant B. Expense

469. B 470. D 471. B 472. A 473. A 474. A 475. C 476. B 477. B

 53
477. Which of the five characteristics of 482. Direct deposit allows an employer to
money can be defined as "need to transfer net pay electronically into an
last"? employee’s bank account.
A. Portability A. True
B. Durability B. False
C. Divisibility 483. used to compare different firms
D. Uniformity at the same point in time.

478. A(n) is a short-term debt that A. Industry comparative analysis

must be paid within one year. B. Cross-sectional analysis
A. current liability C. Trend analysis
B. current asset D. Combined analysis
C. long term liability
484. What is not the main reason that
D. asset companies go "global"?
479. The table shows Mrs Maryam’s in- A. To seek raw materials
come and expenses.She kept 10% of B. To diversify
the total income and a sum of RM300
for the emergency fund. Calculate the C. To narrowed their markets
surplus of income of Mrs Maryam. D. To avoid political hurdles

485. An example of a current asset is?

A. Land
B. Building
C. Cash in bank
D. Machinery
A. RM 2 900
486. Which one are the methods of Cost
B. RM 3 200
of Capital?
C. RM 3 700
A. Cost of Equity
D. RM 4 000
B. Cost of Debt
480. What is a want?
C. Cost of retained earnings
A. a desire for something
D. Cost of Assets
B. a need
487. is the limitation of Traditional
C. clothes approach of Financial Management.
D. water A. More emphasis on long term prob-
481. All of the following are fixed assets lems
EXCEPT B. Ignores allocation of resources
A. land C. One-sided approach
B. inventory D. All of the above
C. expensive technology
488. If I pay a bill online, what is the best
D. all of the above are fixed assets method of payment to use?

478. A 479. A 480. A 481. B 482. A 483. B 484. C 485. C 486. A 486. B 486. C
487. D 488. C
54 Chapter 1. Financial Management

A. cash A. True
B. check B. False
C. debit card 494. Capital Budgeting is important be-
cause ( more than one response
489. What is an agreement between a
expected)
lender and a borrower, who promises
to repay the lender at a later date, A. it is a political decision
with interest? B. it is related to external environ-
A. Credit ment
B. Debt C. it involve huge financial outlay
C. Investment D. it has bearing on Profitability and
liquidity
D. Savings
495. The process of budgeting, saving,
490. Which of the following is the best investing, spending or otherwise su-
definition of financial risk? pervising the use of money by an in-
A. Risk is the possibility that an in- dividual or group is
vestment will lose money. A. Money Management
B. Risk is the possibility that an in- B. Savings Account
vestment will earn a negative return.
C. Checking Account
D. Investment
C. Risk is the possibility that an in-
vestment’s actual return will be less 496. The offers free file software for
than its expected return. individuals who have an income below
D. Risk is the uncertainty regarding $62,000.
the gain or loss from an investment. A. schools
491. MPBP method stands for B. IRS
A. Marginal Pay Back Period method C. employer
497. A decision to acquire a new and
B. Most Pay Back Period method modern plant to upgrade an old one
is a
C. Modified Pay Back Period method
A. financing decision
D. Manual Pay Back Period method
B. working capital decision
492. This plastic card allows you to buy
C. investment decision
a good or service and pay for it now
from a bank account that it is linked D. none of the above
to. 498. If an investor anticipates a signif-
A. Credit card icant rally in the stock market, the
B. Prepaid card investor should:

C. Gift card A. buy the S&P 500 futures contract

B. buy a put option on the S&P 500
D. Debit card
C. sell the S&P 500 futures contract
493. The only way someone else can
make charges on your account is if D. sell a call option on the S&P 500
they have your card. E. sell a put option on the S&P 500

489. A 490. D 491. C 492. D 493. B 494. C 494. D 495. A 496. B 497. C 498. A
 55
499. This is of Financial management A. RM 1 350
B. RM 1 500
C. RM 1 650
D. RM 1 700

504. Siskiyou, Inc. has total current as-

sets of $1,200,000; total current lia-
bilities of $500,000; and long-term
assets of $800,000. How much is the
firm’s Total Liabilities & Equity?
A. Scope
A. $2,500,000
B. Functions
B. $1,300,000
C. Limitations
C. $2,000,000
500. Where a function reaches a highest D. $1,800,000
point
505. The portion of a corporation’s prof-
A. Maximum cost
its that is not distributed to stockhold-
B. Minimum ers is called?
C. Maximum value A. Retained earning
D. Maximum B. Private placement
C. Venture capital
501. Convert 35% to a decimal
D. Preferred stock
A. 3.5
506. payroll records need to be main-
B. 35.00
tained for all full-time employees, but
C. .35 not for part-time employees.

502. Present value of Rs. 1 received after A. true

2 years with 10% discounting rate. B. false
A. 0.268 507. Financial Planning Links
B. 0.628 A. Investment and Dividend decision
C. 0.826
D. 0.286 B. Dividend and financing Decisions
C. Investment and Financing Deci-
503. the table shows Mr. Alan’s family sions
expenses.calculate Mr. Alan’s variable
expenses. D. None

508. Rate of Returns is less than Rate of

Interest, company should prefer
A. Equity
B. Debt
C. both
D. none

499. A 499. B 500. C 501. C 502. C 503. A 504. C 505. A 506. B 507. C
508. A 509. A
56 Chapter 1. Financial Management

509. Debts financing is better than equity A. varies with seasonal needs.
if
B. includes fixed assets.
A. company has strong cash flow C. is the amount of current assets re-
B. company has week cash flow quired to meet a firm’s long-term min-
imum needs.
C. cash flow position does not matter
D. includes accounts payable.
510. Debt causes a dilution of control
516. Total Cash inflows minus Initial Cost
A. True will gives you
B. False A. Pre Bayback Profitability
B. Total Profitability
511. Annual fee definition
C. Post Payback Profitability
A. When you withdraw money from
the ATM and it charges you $1.50. D. None of the Above

B. When a credit card company 517. Through investment the business will
charges you a fee each YEAR earn interest.
A. Money Has Time Value
512. Which is an example of a short term
goal? B. Risk Return Trade Off

A. Saving for 2 months for a $80 dol- C. Cash Flows Are Source of Values
lar outfit? D. Individuals Respond to Incentives
B. Saving 5 years fir a $3000 dollar 518. Which of the following is a credit
trip. facility (loan)?
C. Saving 3 years for a down payment A. Personal Loan
on a car. B. Education Loan
513. Due to the changing rates his com- C. Home Loan
pany is charged for water and sewer, D. All of the above
Jason is concerned about
519. Which of the following is not a finan-
A. variable costs
cial goal?
B. fixed expenses A. Child’s education fund
C. fixed costs B. Getting promotion
D. bankruptcy C. paying down payment for house

514. A financial plan used to determine D. buying a vacuum cleaner

when to replace or purchase fixed as- 520. Which of the following is NOT the
sets. movement of savings?
A. asset budget A. Direct transfer of funds
B. capital budget B. Indirect transfer of funds
C. inventory budget C. Indirect transfer with investment
banker
D. Fardin Budget
D. Indirect transfer with financial in-
515. Permanent working capital termediary

510. B 511. B 512. A 513. A 514. B 515. C 516. C 517. B 518. D 519. B 520. B
521. C
 57
521. Marketing that utilizes Internet and A. IRS
online based technologies is known as B. FED
C. SEC
A. Relationship Marketing
D. FINRA
B. Traditional Marketing
528. In the typical firm, the is the
C. Digital Marketing
chief accounting manager.
D. Cause Marketing
A. chief financial officer
522. The owner’s personal contributions B. treasurer
to the business are known as:
C. controller
A. Equity Capital
D. chief executive officer
B. Debt Capital
529. If you take money out of the bank,
C. Retained Earnings what are you doing
523. Capital budgeting decision has a di- A. stealing money
rect impact on liquidity as well as prof- B. withdrawing money
itability of a business
C. borrowing money
A. True
D. acting like a crazy person
B. False
530. What is the value of a nickel?
524. Difference between current assets
A. $.05
and current liabilities.
B. $.10
A. working capital
C. $.25
B. liabilities
C. fixed assets 531. When items are bought on credit and
paid for over a long period of time,
525. Income from your Job/employment. the cost to the buy
A. Expense A. is the same as if the items were
bought with cash
B. Liability
B. is less than if the items were bought
C. Salary
with cash
D. Asset
C. is more than if the items were
526. The philosophy behind a "hard" bought with cash
salary cap is to 532. The table used for finding future
A. constrain all franchises to spend value of an annuity is
the same amount on payroll A. PVF Table
B. change the behavior of high- B. PVAF Table
payroll teams
C. DCF Table
C. share certain types of revenue
amongst all franchises D. ACF Table

D. All of the above 533. refers to a firm holding some

cash to meet its routine expenses that
527. Which agency would be most in- are incurred in the ordinary course of
volved in tax collection? business.

522. A 523. B 524. A 525. C 526. A 527. A 528. C 529. B 530. A 531. C 532. D
533. B
58 Chapter 1. Financial Management

A. Speculative motive 539. which of the following is NOT an

B. Transaction motive alternative name for IRR method

C. Precautionary motive A. Time Adjusted Rate of Return

D. Compensating motive B. Trial and Error Yield Method

534. It consists of recognized gains and C. Discounted Rate of Return

losses that are not included in the in- D. Accounting Rate of Reurn
come statement but are found in the
equity section 540. is the example of a financial de-
A. Income Statement cision.

B. Statement of Changes in Equity A. Investment decision

C. Comprehensive Income B. Financing decision
D. Statement of Financial Position C. Dividend decision
535. Dividend decision is related to D. All of these
A. Right issue of share 541. B/C Ratio is calculated as
B. Reinvestment Requirement
A. PV of Cash inflows - PV of Cash
C. Cash Flow Statement outflows
D. None of the above B. PV of Cash outflows - PV of Cash
E. None of the above Inflows

536. Amount of money you have coming C. PV of Cash inflows / PV of Cash

in, as well as the money you have go- outflows
ing out D. PV of Cash outflows / PV of Cash
A. Pay yourself first inflows
B. Income 542. Becoming more financially literate
C. Budget enables people to make better per-
sonal financial decisions
D. Cash flow
A. True
537. Higher debt equity ratio (debt / eq-
uity) results in B. False
A. lower financial risk 543. Rebecca has saved $12,000 for her
B. higher degree of operation risk college expenses by working part-time.
C. higher degree of financial risk Her plan is to start college next year
and she needs all the money she saved.
D. higher EPS and financial risk Which of the following is the safest
538. When a corporation uses an initial place for her college money?
public offering to raise capital, the A. Locked in her closet at home
stock is sold in the
B. Stocks
A. Primary Market
C. Corporate bonds
B. Secondary Market
D. A bank savings account
C. Unsecured Financing Market
D. Over-the-Counter Market 544. What does "ATM" stand for?

534. C 535. B 536. D 537. C 538. A 539. D 540. D 541. C 542. A 543. D 544. A
 59
A. Automated Teller Machine 550. The money you get before deduc-
B. Almost Time Machine tions is called?
A. Gross Pay
C. Active Time Moment
B. Net Pay
D. A Time Machine
C. Take Home Amount
545. A is a report of the balances in
all assets, liability, and owner’s equity D. Year To Date
accounts at the end of a accounting 551. Financing decisions involve
period
A. Fixed assets decisions
A. statement of cash flows
B. Capital Budgeting decisions
B. balance sheet
C. Shareholders fund decisions
C. income statement
D. Debt Equity decisions
D. financial statement
552. Planning for profits includes:
546. A(n) is an individual record that
A. Forecasting sales
summarizes information for a single
category, such as cash or sales. B. Evaluating profit potential
A. statement C. Controlling costs
B. customer D. Budgeting
C. account E. All of the above
D. budget 553. A person who pays taxes is called a
547. Your forgot to pay $100 on your
credit card bill this month, your next A. resident
month’s bill is going to be $112. How B. community
much interest did they charge for miss-
C. tax payer
ing your payment?
D. employee
A. 112%
B. 2% 554. Higher dividend per share is associ-
ated with
C. 12%
A. High earnings high cash flows un-
D. 22% usual earnings and high growth op-
548. Credit card portunities

A. Short term debt B. High earnings high cash flows sta-

ble earnings and high growth oppor-
B. Long term debt tunities
549. The price of the ACER laptop is RM C. High earnings high cash flows sta-
2800. ble earnings and lower growth oppor-
A. Specific tunities
D. High earnings low cash flows sta-
B. Measurable
ble earnings and lower growth oppor-
C. Attainable tunities
D. Realistic 555. Individual record maintained for
E. Time-bound each employee.

545. B 546. C 547. C 548. A 549. B 550. A 551. D 552. E 553. C 554. C 555. A
60 Chapter 1. Financial Management

A. employee earnings record A. requires

B. statement of income B. does not require
C. cash flow statement 561. Operating expenses include:
D. chart of accounts A. Remodeling costs
B. Security deposits
556. What degree provides the highest
earning potential in pay? C. Utility bills

A. High School Diploma D. Legal permits

B. Associate’s Degree 562. the ability of a customer to buy

something before payment, based on
C. Undergraduate Degree the trust that payment will be made
D. Master’s Degree in the future
A. purchase
557. Using the paycheck stub below, how
much did Grady pay in State Income B. limit
Taxes during this pay period? C. credit
563. Which of the following is not a cross-
statement ratio analysis?
A. Current ratio
B. Days sales outstanding
C. Inventory turnover
D. Return on investments
A. $31.15 564. Followings are the example of fixed
B. $66.75 assets, except

C. $34.43

558. Medical expenses.

A. Long-term goal
B. Short-term goal

559. Federal tax return mistakes can be A. machinery

avoided by
B. building
A. using the proper tax forms, tax
tables, and correct filing status. C. inventories
D. land
B. signing the completed return.
565. What term describes an owner’s
C. filing online or mailing your return
claims to the assets of their business?
before the deadline.
A. Cash Flows
D. all of the above.
B. Net Income
560. Taxes are fees that the government
C. Owner’s Equity
people to pay in order to live and
work in their state and the USA. 566. What is ETC?

556. D 557. A 558. A 559. D 560. A 561. C 562. C 563. A 564. C 565. C
566. B
 61
A. Extended Time Constraints 571. The stock market indices hit all
time high against the backdrop of
B. Estimate to Completion
economic slow down in December
C. Estimate to Compare 2020.This could be due to following
factor/factors:
D. Engage the Client
A. increase in revenue
567. A is a type of credit score cre-
B. spending boom
ated by the Fair Isaac Corporation.
Lenders use borrowers’ these scores C. consumption boom
along with other details on borrowers’
D. All the above
credit reports to judge how much the
borrower can be trusted to pay back 572. Limitation of financial analysis is
money owed based on their payment
history A. Dressing

A. Debt B. window

B. Loan C. Window Dressing

C. FICO score D. None

D. Net Income 573. The use of borrowed funds to in-

crease the return on owners’ equity
568. Working capital management is con-
A. Financial Leverage
cerned with
B. Financial Management
A. how a firm can best manage its
cash flows as they arise in its day-to- C. Line of Credit
day operations. D. Long-Term Financing
B. how a firm should raise money to
fund its investments. 574. Borrowing money
A. creates leverage
C. what long-term investments a firm
should undertake. B. increases financial flexibility
D. managing a firm’s capital stock. C. decreases risk to shareholders

569. Average Investment = D. decreases expected returns to

shareholders due to interest payments
A. (Original Cost +Scrap Value ) / 2
575. A(n) is the projection of the sales
B. ((Original Cost - Scrap Value ) / 2) revenue that will be earned and the
+ Scrap Value expenses that will be incurred during
C. Both of the above a future period of time.

D. None of the above A. operating budget

B. balance sheet
570. Managers are usually held account-
able if their part of the company faces C. earnings forecast
financial problems. D. income statement
A. True
576. Long term promissory notes issued
B. False by the firm or the public

567. C 568. A 569. C 570. A 571. D 572. C 573. A 574. A 575. A 576. B 577. A
62 Chapter 1. Financial Management

A. trade credit 582. When annual cash inflows are

EQUAL, Pay Back Period is ascertaint
B. bonds
as
C. common stock
A. Annual Cash inflows / Original In-
D. preferred stock vestment
577. A plastic payment card linked to a B. Annual Cash inflows / Total Cash
financial account and is used for trans- inflows
actions. C. Original Investment / Total Cash
A. Debit Card inflows
B. Credit Card D. Original Investment / Annual
Cash inflows
C. Checking Account
D. Savings Account 583. Q 1: How many approaches are
there in Capital Structure?
578. In discounting, the table value goes
A. 4
on increasing with the increase in the
rate of Interest and number of year. B. 5
A. True C. 3
B. False D. 2

579. How long should you press the 584. Sales

power button to shut down a frozen
computer?
A. Press and Release
B. 2-3 Seconds
C. 5-10 Seconds

580. Unplanned growth: A. Revenue

A. Yields unplanned income B. Expense
B. Can be rewarding 585. What does "IRS" stand for?
C. Can be chaotic A. Instant Regulation Service
D. Builds a business faster B. Increase Rent Status
581. In February 2020, Mr Patrick re- C. Internal Revenue Service
ceived a total income of RM4 500.
D. Invoice Reciept Sale
His monthly fixed expenses and vari-
able expenses are RM2 880 of RMx 586. Which one is not a financial decision
respectively. There is a negative cash
flow of RM620. Calculate the value of A. Investment decision
x. B. Fund decision
A. 1 000 C. Financing decision
B. 3 500 D. Dividend decision
C. 2 240 587. payments using security features on
D. 3 880 the Internet

578. B 579. C 580. C 581. C 582. D 583. A 584. A 585. C 586. B 587. B
 63
A. Gross payment A. Cash paid to promoters
B. Electronic payment B. Cash paid to Suppliers of Material
C. no payment
D. computer payment C. Cash paid to Employees
D. Initial Investment
588. There are checks in the checkbook,
so there must be money in the check- 594. Which situation would result in a
ing account business having a profit?
A. Fact A. If the owner buys matching uni-
B. Fiction forms

589. What the SES stands for B. If the revenue is less than the ex-
penses
A. Simple Exponential Smoothing
C. If the revenue is greater than the
B. Simple Excellent Smoothing
expenses
C. Simple Example Smoothing
D. If the owner buys coffee for the
D. Simple Expertise Smoothing employees every morning
590. Under VRS the company asks the 595. What is the formula for Merchandise
permanent employees to retire volun- Inventory Turnover Ratio?
tarily for a lump sum one-time pay-
out by the company. This exercise is A. Average Merchandise Inventory/-
normally undertaken by the company: Cost of Goods Sold

A. to reduce cost B. Cost of Goods Sold/Merchandise

Inventory
B. to improve overall efficiency
C. Merchandise Inventory/Cost of
C. to realign its strategy Goods Sold
D. All the above
D. Cost of Goods Sold/Average Mer-
591. This ratio is used to measure the liq- chandise Inventory
uidity of the firm’s receivable.
596. Creditors’ claims to the assets of a
A. Current Ratio business
B. Accounts Receivable Turnover Ra- A. assets
tio
B. liabilities
C. Quick Ratio
C. owner’s equity
D. Inventory Turnover Ratio
D. accounting equation
592. William purchased a new book for
$15. Calculate 6.75% sales tax for his 597. is earnings that a business re-
purchase. ceives for the goods and services it
sells.
A. $0.75
A. revenue
B. $1.01
C. $1.75 B. gross pay
C. profit
593. Cash outflow in respect of a capital
budgeting project means D. sales forecast

588. B 589. A 590. D 591. B 592. B 593. D 594. C 595. D 596. B 597. A
64 Chapter 1. Financial Management

598. Adam Smith is considering automat- A. Government

ing his pin factory with the purchase
B. Military
of a $475,000 machine. Shipping and
installation would cost $5,000. Smith C. Personal
has calculated that automation would
result in savings of $45,000 a year 603. How does inflation affect an econ-
due to reduced scrap and $65,000 omy?
a year due to reduced labor costs. A. Money increases in value.
The machine has a useful life of 4
years and falls in the 3-year property B. Money decreases in value.
class for MACRS depreciation pur- C. The value of money doesn’t
poses. The estimated final salvage change.
value of the machine is $120,000. The
firm’s marginal tax rate is 34 percent. 604. The statement of financial position
The incremental cash outflow at time is also known as the?
period 0 is closest to
A. Spreadsheet management
A. $280,000.
B. Balance Sheet
B. $380,000.
C. Cash flow statement
C. $480,000.
D. $580,000. D. Income statement

599. Budgeting is much easier for a new 605. money coming in through wages,
business than a well-established busi- al-lowance or other sources
ness.
A. income
A. True
B. budget
B. False
C. passive income
600. Which of the following is considered
a need? 606. Debit cards require using this to ac-
cess the account to perform transac-
A. A new car
tions.
B. A clothes dryer
A. Check
C. A place to sleep
B. Credit Card
D. Lunch at a local restaurant
C. ATM
601. If actual spending is greater than
planned spending, it is referred to as D. PIN
a
607. Prepare to change the financial plan
A. surfeit. if it is not realistic.
B. liability. A. Setting goals
C. surplus
B. Evaluating financial status
D. deficit.
C. Creating financial plan
602. Fill in the Blank: Medicaid is a
D. Carrying out financial plan
health insurance program to help
people who cannot afford health care E. Reviewing and revising the
costs. progress

598. C 599. B 600. C 601. D 602. A 603. B 604. B 605. A 606. D 607. E
 65
608. Securities exchange market and 613. Which of the following is true
over-the-counter (OTC) market such A. Gross profit is the first item on a
as NASDAQ, London Stock Exchange cashflow statement
and New York Stock Exchange are the
example of for Bursa Malaysia is- B. Repayment of debt does not lead
suer. to a change in equity

A. initial public offering C. The ROI per definition tells in-

vestors how to deal with employee
B. secondary market costs
C. common stock D. Equity on a balance sheets always
D. preferred stock equals all assets
614. the ability to live independently and
609. The optimum capital structure of a
productively in a community
firm is the point at which
A. independent living
A. V is maximum and ko is minimum
B. advantage

B. V is minimum and ko is maximum C. savings account

615. Which of the following is not a
C. V and ko is maximum source of external financing for a pub-
lic limited company?
D. V and ko is minimum
A. Ovedraft
610. Computerized accounting systems
B. Debentures
used in business:
C. Retained profit
A. QuickBooks
D. Share capital
B. Peachtree
616. Payroll taxes consist of income taxes,
C. Business Works Social Security, Medicare, and unem-
D. Mind Your Own Business ployment taxes.

611. Operations budget refers to A. True

the vari- able and fixed costs needed B. False
to run the operations of the company
617. when your expenses and Income are
but are not directly attributable to the
equal
generation of sales.
A. net income
A. TRUE
B. gross income
B. FALSE
C. balanced budget
612. Financial plans include remodeling D. great
costs, security deposits, advertising,
insurance, supplies, legal permits, li- 618. If a firm requires to two crores for
censes, payroll, rent, utilities, shipping six months time to keep the stock of
fees, and bank fees. What term is used raw material, it should approach
to describe these items? A. Money market
A. Budgeted Expenses B. Capital market
B. Forecasted Expenses C. Both (a) and (b)
C. Start-Up and Operating Expenses D. None of the above

608. B 609. A 610. A 610. B 610. C 610. D 611. A 612. C 613. B 614. A 615. C
616. A 617. C 618. A 619. A
 66 Chapter 1. Financial Management

619. What is the main disadvantage of A. Thumbs up

a sole proprietorship compared to a
B. Thumbs down
corporation?
A. Unlimted liability of the owner. 626. What is the monthly finance charge
if the average daily balance is $30, the
B. More costly to set up. daily periodic rate is 0.07%, and the
C. More difficult taxation rules. number of days in the cycle is 30?
D. More disclosure requirements to A. 63 Cents
inform the public. B. 90 Cents
620. The market price of a share of com- C. 21 Cents
mon stock is determined by:
A. the board of directors of the firm.
B. the stock exchange on which the
stock is listed.
C. the president of the company.
D. individuals buying and selling the
stock.

621. Except for equipment, fixed assets

tend to lose their value over time.
627. A. Asset
A. True
B. Liability
B. False
C. Expense
622. CAPM Stands for
628. Who pays into Social Security?
A. Capital asset pricing model
A. Employees
B. Capital amount pricing model
B. Self-employed
C. Capital amount printing model
C. Employers
D. Capital asset printing model
D. All of the above
623. Flat rate of interest is
629. Which of the following would not be
A. applied to the principal amount considered a benefit?
over the borrowed fixed term
A. retirement plan
B. based on the current amount owed
B. health insurance

C. no interest is charged C. paid vacation

D. salary
624. A is a non profit financial
institution that is run by its members. 630. Calculate the missing amount for
A. Payday loan BLiabilities

B. commercial bank A. $7,000

C. credit union B. $1,800

C. $3,000
625. Payday loans charge a really high
interest rate. D. $5,200

620. D 621. B 622. A 623. A 624. C 625. A 626. A 627. A 628. D 629. D
630. D
 67
631. When bad position of the business 635. a deduction as recorded in an ac-
is tried to be depicted as good, it is count
known as A. credit
A. Personal Bias B. income
B. Price Level Changes C. debit
C. Window Dressing
636. A federal student loan is provided
D. All of the Above by

632. Other things remaining the same, an A. Private companies

increase in the tax rate on corporate B. The state you live in
profits will:
C. US Federal government
A. Make the debt relatively cheaper.
D. Investors
B. Make the debt relatively dearer.
637. is a technique in which exposure
C. Have no impact on the cost of debt. is managed by shifting the time of ex-
posure by accelerating or delaying the
D. Can’t say receivables or payables.
A. Matching
633. Which of the followings are key fi-
nancial statements in an organization B. Leading and lagging
C. Invoicing in domestic currency
D. Forward contracts
E. Not aware of

638. All of the following actions result in

equity capital EXCEPT
A. issuing bonds
B. liquidating assets
C. issuing stock
D. reinvesting earnings
A. Statement of cash flows
639. Daxin has a basic account that al-
B. Bank statement
lows him to deposit and withdraw
C. Balance sheet money, write checks, and receive a
D. Income statement monthly statement with no service
charge if he maintains a minimum bal-
E. Supplier’s quotation ance of $500. What type of account
is this?
634. What can be sources of credit?
A. Retirement plan account
A. Banks
B. savings account
B. Retail Stores
C. checking account
C. Savings & Loans
640. All people have basically the same
D. Credit Unions
financial planning goals regardless of
E. Family members which stage of life they are in.

631. C 632. A 633. A 633. C 633. D 634. A 634. B 634. C 634. D 634. E 635. C
636. C 637. B 638. A 639. C 640. B
68 Chapter 1. Financial Management

A. True A. A retirement plan

B. False B. An educational savings plan

641. The social responsibility of business C. An investment in stocks

is to increase its profits. - Milton Fried-
D. A checking account for teenagers
man
A. Competitive Advantage 647. If the NPV of project A is + $120,
and that of project B is -$40 and that
B. Profits of project C is + $40, what is the NPV
of the combined project?
642. Joe works 50 hours and makes
$12.50 an hour, what is his gross pay. A. +$100
(40 hrs. is a regular work week)
B. +$180
A. $500.00
C. +$60
B. $187.50
D. +$120
C. $678.50
648. The occurrence of risk due the
D. $687.50
changes in the external economic en-
643. A financial plan explains how a busi- vironment is called as
ness will manage its records. A. Unsystematic Risk
A. True B. Systematic Risk
B. False C. All of the Above
644. Financial Managers are often task D. None of the Above
to trade the equity securities of the
firm in the financial market. What 649. Equipment financing can fall into
particular activity is this? any several categories namely financ-
ing to purchase of new equipment
A. Forecasting & Planning
B. Making Crucial Investment & Fi- A. TRUE
nancing Decisions B. FALSE
C. Coordinating & Controlling
650. Lisa will buy 2 new car tires three
D. Trading in Financial Markets months from now before taking a trip.
Each tire costs $75. How long will she
645. Sarah earns $600 a month. She need to plan to achieve her goal?
spends 15% on rent. She puts 20%
into her savings account. How much A. Short-term
money does she have left each month? B. Intermediate-term
A. $90
C. Long-term
B. $290
D. She won’t be able to afford the
C. $390 tires

646. Which of the following best de- 651. The best sentence to describe activ-
scribes a 529 plan? ity ratio.

641. B 642. D 643. A 644. D 645. C 646. B 647. D 648. B 649. A 650. A
 69
C. Excess of Fixed Assets over Cur-
rent Liabilities Fixed Cost
D. Excess of Current Assets over
Fixed Assets

655. Surplus life over payback method

considers for the selection of
projects
A. low payback period
B. high post pay back period
A. The extend to which a firm is us-
ing debt financing and the degree of C. Total Cash inflows
safety that the firm provides to the D. None of the Above
creditors.
656. Financial system is made up of
B. The firm’s ability to meet its cur-
households, businesses, government,
rent obligations as they come due.
financial institutions, and financial
C. The effectiveness of a firm in man- markets.
aging its assets that related to the level
A. True
of operations
B. False
D. The combined effects of liquidity,
asset management and debt of the 657. Any 12-month period you choose to
firm. treat as a year for accounting pur-
652. Which of the following statements poses.
about budgets is true? A. fiscal year
A. Budgets guarantee a certain B. calendar year
amount of profit.
C. 365 day earth year
B. Budgets must be followed exactly
as planned. D. business year

C. Budgets can help in controlling op- 658. money coming in through wages, al-
erations. lowance or other sources
D. Budgets prevent borrowing. A. flexible expenses

653. To shop safely online, we should use: B. income

A. debit card C. gratuity
B. credit card 659. The value calculated by dividing the
C. virtual credit card corporation’s net worth by the total
number of shares of stock outstand-
D. All the above ing.
654. Working capital refers: A. Book Value
A. Excess of Current Assets over Cur- B. Market Value
rent Liabilities
C. Par Value
B. Excess of Current Liabilities over
Current Assets 660. . Long term fund sources are

651. C 652. C 653. C 654. A 655. B 656. A 657. A 658. B 659. A 660. D 661. A
70 Chapter 1. Financial Management

A. Retained earnings B. sales increased relative to expenses.

B. Debentures
C. the Federal Government increased
C. Share capital
the tax rate.
D. All of the above D. dividends were decreased.
661. What is Social Security? 665. Which of the following is not one of
A. a social insurance system that sup- the three most common used financial
ports retired workers, survivors and statements
the disabled A. Profit ratio
B. a private insurance system that B. Income statement
supports retired workers, survivors
C. Cash flow statement
and the disabled
D. Balance sheet
C. a private insurance system used by
the rich 666. The table shows part of Encik Yasir’s
monthy financial plan.Express p as a
D. a social insurance system used by
percentage of the net income.
the rich

662. If each of the following persons had

the same amount of take home pay,
who would need the greatest amount
of life insurance?
A. An elderly retired man, with a wife
who is also retired
B. A young married man without chil-
dren
C. A young single woman with 2
young children A. 25%
D. A young single woman without B. 20%
children C. 15%
663. Which of the following is a method D. 10%
of growth?
667. When people buy property and
A. Merging with another business agree to pay for it later, they are buy-
ing on
B. Acquiring another business
A. credit
C. Expanding the product mix
B. debit
D. All of the above
668. Need:Want
664. The gross profit margin is un-
changed, but the net profit margin A. I need to go out: I want food
declined over the same period. This B. I need food to eat: I want Cookout
could have happened if
A. cost of goods sold increased rela- C. I need Jordans on my feet; I want
tive to sales. a new car

662. C 663. D 664. C 665. A 666. C 667. A 668. B 669. A

 71
D. I need a new cell phone: I want A. Rate of return
the IPhone 8 B. Cash flow of the project
669. How can I develop a financial goal? C. Investment criteria
( click all that apply)
D. Flotation cost
A. save money
675. Convert 7% to a decimal
B. make a list
A. .07
C. spend a lot of money
B. .007
D. pay off credit card debt
C. 7.0
670. All of the following apply to state
government budgets EXCEPT: 676. "A bird in the hand is better than
two in the bush" is a statement better
A. they are required by law. regarded for concept
B. they are used for planning pur- A. Time Value of Money
poses.
B. Profitability
C. they are used to determine how
much money will be needed to fund C. Liquidity
the government. D. Solvency
D. deficit spending is permitted. 677. Moving money from one account to
671. Financial Management relates to another is called
management activities that are con- A. A deposit
cerned with planning and controlling
B. A transfer
of financial resources and generally
involves balancing risks and profitabil- C. A withdrawl
ity. D. None of these
A. TRUE 678. Having ALOT of money means you
B. FALSE are important

672. What should goals be based off of? A. True

A. Objectives B. False

B. Wants 679. Check the intangible assets

C. Needs A. Patents
D. Values B. Geographical Indications

673. Check all the boxes that includes C. Trademarks

every option for the company to get D. Factories
equity funding from external sources!
E. Work in Progress
A. venture capitalist investments
680. An estimate of the actual money re-
B. IPO ceived and paid out for a specific pe-
C. retained earnings riod.
D. owner contributions A. operating budget

674. Which one is not a factor affecting B. cash budget

capital budgeting decision C. start-up budget

669. D 670. D 671. A 672. D 673. A 673. B 674. D 675. A 676. A 677. B 678. B
679. A 679. B 679. C 680. B 681. A
72 Chapter 1. Financial Management

681. Investments, such as stocks or bonds A. Liquidity Ratio

that can be converted to cash quickly.
B. Asset Utilization Ratio
A. marketable securities
C. Leverage Ratio
B. marketable debt D. Profitability Ratio
C. dividends
687. The table above is Encik’s Zarul in-
D. ETF’s come. Calculate active income of En-
cik Zarul
682. An operating budget will determine
if a business has adequate financial
resources on hand to pay bills as they
become due or if it will need to bor-
row money.
A. True
B. False
A. RM 3 000
683. Which out of the following happens B. RM 3 250
to be a financial decision?
C. RM 3 590
A. Investment decision
D. RM 3 850
B. Financing decision
688. True or False: Auto insurance is re-
C. Dividend decision
quired by law if you drive.
D. All of these
A. true
684. The type of financing where the firm B. false
that specializes in buying other firm’s
account receivable refers to? 689. To identify the uses of funds in a
firm over a time is by
A. Promissory note
A. increasing in assets.
B. Commercial paper
B. increasing in liabilities.
C. Factoring
C. decreasing in assets.
D. Mortgage
D. selling the stocks.
685. This ratio measures the proportion
of assets paid for with debt. 690. Leasing does not mean
A. Debt Ratio A. the the business avoids large cash
outlay
B. Profitability Ratio
B. The business owns the asset
C. Liquidity Ratio
C. the assets can be updated every
D. Cash Ratio couple of years
686. A ratio that measures the extent to 691. Corporate bonds
which a company generates a profit.
This analysis focuses on the relation- A. Short term debt
ship between revenues and expenses B. Long term debt
and on the level of profits relative to
the size of investment in the business. 692. 3/10, n/30

682. B 683. D 684. C 685. A 686. D 687. B 688. A 689. A 690. B 691. B
692. C 693. A
 73
A. 30% discount if you pay in 3 days 698. Bond backed by the various assets
B. Must pay entire bill in 3 days of the corporation is?

C. 3% discount if paid in 10 days A. Debenture

693. Anyone can be at risk of internet B. Mortgage

fraud including famous people. C. Convertible
A. True
D. Registered
B. False
699. This is an estimate of the actual
694. Which of the following is not one money a business received and paid
of the three important elements of a out for a specific period.
company’s financial strength?
A. start-up budget
A. assets
B. owner’s equity B. operating budget

C. payroll C. short-term budget

D. liabilities D. cash budget

695. Unincorporated businesses are: 700. Which of the following statement is

A. limited to using only debt as a true:
source of finance A. one of the benefits of incorporat-
B. limited to using only equity as a ing your business is that you become
source of finance entitle to receive unlimited liability.
C. able to sell shares B. sole proprietorship are subject to
D. unable to sell shares. more regulations than corporation.

696. Mario also has a financial plan. He C. sole proprietorship do not have to
wants to save RM10 000 for wedding pay corporate tax
expenses after five years. Is this finan- D. all of the above are correct
cial goal a long-term or short-term
goal? Is this considered a want or 701. The costs of operating a business.
need?
A. expenses
A. short-term goal
B. start-up budget
B. long-term goal
C. need C. operating budget

D. want 702. What is the current amount of

money in your bank account called?
697. The risk due to the under utilization
of production capacity and resources A. balance
and thereby lowering of revenue is
called B. debt

A. Business Risk C. withdrawl

B. Financial Risk D. payment
C. Production Risk 703. Below are the importance of finan-
D. None of the Above cial management except:

694. C 695. D 696. B 696. C 697. A 698. B 699. D 700. C 701. A 702. A
703. D
74 Chapter 1. Financial Management

A. Planning and controlling financial A. Liquidity

resources
B. Asset Utilization
B. Allow better communication
C. Debt-Utilization
among department
D. Profitability
C. To guide proper financial decision
making 709. These are intermediaries that mobi-
D. Help to promote product lize savings and facilitate the alloca-
tion of funds
704. is the example of a financial de- A. financial services
cision.
B. financial markets
A. Investment decision
C. financial instruments
B. Financing decision
D. financial institutions
C. Dividend decision
710. Bill is a construction worker who has
D. All of these
to have back surgery. He will be out
705. The use of the unaudited financial of work for 3 months. His disability
statements for ratio analysis is prefer- insurance policy will pay him 60% of
able because it reflects the firm’s true his salary for the entire time he is out
financial condition. of work. If his salary is$3,000/month,
what is the total amount of money he
A. True will receive from his insurance com-
pany?
B. False
A. $1,800
706. Which of the following is studied
with the help of financial leverage B. $5,400

A. marketing Risk C. $9,000

B. Interest Rate Risk 711. When the stock market index

is ris- ing, a company may issue in
C. Foreign Exchange Risk order to meet its financial
D. Financing Risk requirements.

E. None of the above A. Debentures

B. Bonds
707. Which of the following would be an
example of revenue for a business? C. Equity shares
A. Paying rent D. None of the above

B. Selling a product 712. Define multinational corporation

(MNC)
C. Paying for utilities
A. firms that engage in some form of
D. Buying supplies to make your
domestic business.
product
B. firms that engage in some form of
708. It pertains to the firm’s ability to pay international business.
any immediate and incoming cash dis-
bursements 713. The followings are elements of the
financial management except

704. D 705. B 706. D 707. B 708. A 709. D 710. B 711. C 712. B 713. D
 75
A. debts and savings 719. Which of the following is NOT and
objective of financial management?
B. purification of property
A. Liquidity
C. savings, investmensts and protec-
tions B. Solvency
D. budget C. Growth
D. Expenses
714. Which one is NOT an example of
Systematic Risk 720. Which method of paying requires
A. Market Risk you to arrange in advance?
A. credit card
B. Interest Rate Risk
B. automatic draft
C. Business Risk
C. check
D. Purchasing Power Risk
721. Below are the responsibilities of fi-
715. Wealth Maximisation is directly nancial managers, except
linked with
A. Controlling credit operations
A. Factory Efficiency
B. Acquiring needed inventory
B. Employee Turnover
C. Making capital expenditures
C. Market Capitalisation
D. decide equity share percentage to
D. JIT founders and investors
716. Sales and profits for a specific period E. Managing day-by-day needs of the
are reported in a company’s income business
statement 722. An agency relationship exist when
A. true one or more person hire another per-
son to perform some service but with-
B. false
hold decision-making authority from
717. The objective of IAS 1 (2007) is to that person.
prescribe the basis for presentation of A. TRUE
general purpose financial statements,
B. FALSE
to ensure comparability both with the
entity’s financial statements of pre- 723. What is objective of financial man-
vious periods and with the financial agement
statements of other entities.
A. Profit maximisation
A. True B. Shareholder’s Wealth maximiza-
B. False tion

718. On a deposit slip, out of the checks, 724. Mrs Alice save RM 950 a month
where do you indicate how much cash from her monthly income of RM 1600.
do you want to keep out? A. Specific
A. Signiture line B. Measurable
B. Cash line C. Attainable
C. Less cash line D. Realistic
D. Subtotal E. Time-bound

714. C 715. C 716. A 717. A 718. C 719. D 720. B 721. D 722. A 723. B 724. C
725. B
76 Chapter 1. Financial Management

725. money spent 730. The financial phrase "you never

know when it is going to rain" is a
A. budget
reference to the need to have what?
B. cash outflow
A. an emergency fund
C. passive income
B. an umbrella
726. Which objective of financial manage-
ment is concerned with the ability of C. a plan to get out in case of flood-
a business to efficiently manage its ing
revenue and expenses? D. limited liability on your car
A. Profitability
731. The level of packing used to present
B. Liquidity a gift to your friend on his birthday -
C. Efficiency A. Primary
D. Growth B. Secondary
727. BANK OVERDRAFT IS A FORM C. Transportation
OF
D. None
A. SHORT TERM FUNDS
B. LONG TERM FUNDS 732. The cost of owning a car includes

C. BOTH A. insurance

D. NONE OF THE ABOVE B. repairs

728. What is the difference between cur- C. gas

rent and non current assets? D. all of these
A. There is no difference
733. Fill in the blank: Insurance is a finan-
B. Current assets are the same as cur- cial agreement between a person and
rent liabilities and non current are not an insurance company to financially
protect the person from events.
C. Current assets tend to be easily
A. current
converted to cash whereas non cur-
rent are not B. expected
D. A company will gain more profit C. unexpected
if they use non current only
734. The more principle (money) you in-
729. The expected return on a riskless vest the more you will make over the
asset is greater than zero due to long-term, this is describing the fol-
A. an expected return for delaying lowing investment factor:
consumption. A. Money
B. an expected return for opportunity
B. Time
costs.
C. an expected return for taxes. C. Interest Rate

D. irrational investors who believe 735. The overall financial risk depends
risk is always present. upon the

726. A 727. A 728. C 729. A 730. A 731. B 732. D 733. C 734. A 735. A
 77
A. Proportion of debt in the total cap- 741. A(n) is an unsecured bond backed
ital by the financial reputation of the issu-
B. Proportion of equity in the total ing corporation.
capital A. Debenture
C. Both of the above B. general obligation bond
D. None of the above
742. Under which of the following circum-
736. Risk free rate of return is the com- stances a company is NOT likely to
pensation for declare a higher dividend?
A. Increase in time value of money A. When the earnings of the company
B. Increase or Decrease in time value are high
of money B. When a company has a lucra-
C. Decline in time value of money tive forthcoming business opportu-
D. Increase and Decrease in time nity(Growth opportunity )
value of money C. When the cash flow position of the
company is strong
737. The first step in preparing business
budgets is D. None of the above
A. list each type of income and ex-
743. These are given to managers based
pense that will be part of the budget
on their effectiveness in achieving
company goals
B. gather accurate financial informa-
tion A. Economic Value Added

C. calculate amount of net income or B. Performance Shares

loss C. Preference Shares
D. explain the budget to people who D. Ordinary Shares
need to make financial decisions
744. The steps in effective financial plan-
738. Dividend Decision is related to
ning are
A. Right issue of share
A. establishing organizational goals
B. Reinvestment requirement and objectives, identifying expenses,
C. Cash flow statement and budgeting.
D. None of the above B. establishing organizational goals
and objectives, budgeting for finan-
739. Debt and equity differ in cost and
cial needs, and identifying sources of
risk.
financing.
A. True
C. developing a plan of action, moni-
B. False toring the plan, and evaluating.
740. A firm’s financing costs include D. identifying sources of financing,
A. depreciation expense. budgeting, and evaluating.
B. interest expense E. None of these answers are correct.
C. costs of goods sold. 745. Focal point in Financial Manage-
D. both A and B. ment is

736. C 737. A 738. B 739. A 740. B 741. A 742. B 743. B 744. B 745. B
78 Chapter 1. Financial Management

A. Increasing sales of the firm 751. The rules, standards, and practices
businesses follow to record and report
B. Creating shareholder’s value
financial information are called
C. Increasing Profit
A. generally accepted accounting
D. Increasing Market Share principles

746. Card allowing people to borrow B. CPA regulations

money up to a certain limit in order C. auditing principles
to purchase items D. all of the answers are correct
A. debit card
752. a card that can be used to borrow
B. credit card money from financial institutions,
C. purpose A. debit card
B. credit card
747. Where do you put your signature on
a check you just wrote? C. check card
A. none of them D. cash card

B. Bottom left corner on the line 753. What is the formula for Net Profit?
C. Top right corner on the line A. Revenue - Expenses

D. Bottom right corner on the line B. Revenue - Cost of Sales

C. Cost of Sales - Expenses
748. Which analysis depicts the relation-
ship between two figures D. Fixed costs + Variable Costs

A. Ratio Analysis 754. Assest easily converted into cash

B. Trend Analysis A. Cash

C. Cumulative figures and averages B. Liquid Asset

C. Fixed Asset
D. Dividend Analysis
D. Current Asset
749. A fixed asset should be financed
through: 755. CAPITAL STRUCTURE DENOTES
THE COMPOSITION OF
A. a long-term liability
A. SHARE CAPITAL
B. a short-term liability
B. LONG TERM AND SHORT
C. a mix of long and short-term lia- TERM DEBTS
bilities
C. DEBT AND EQUITY
D. current liability D. RESERVES AND SURPLUS
750. Which of the following represents 756. consistent expense every month
the future value of Pounds 1,000 in-
vested at 10% per annum for 10 years? A. Flexible expense
B. Fixed expense
A. Pounds 2,500
C. Income
B. Pounds 1,913
757.In order to calculate EPS, Profit af-
C. Pounds 2,594
ter Tax and Preference Dividend is
D. Pounds 2,600 divided by

746. B 747. D 748. A 749. A 750. C 751. A 752. B 753. A 754. B 755. B 756. B
757. B
 79
A. Market Price of Equity Shares A. How you can spend your money
the fastest way possible
B. Number of Equity Shares
B. Managing money so that you can
C. Face Value of Equity Shares
meet short and long term financial
D. None of the above goals

E. None of the above C. a fancy term for budgeting

758. Sole trader is 763.The finance manager is accountable

for
A. Business that handle by one group
of individual. A. Earning capital assets of the com-
pany
B. Business that handle by two or
more people. B. Effective management of a fund
C. Business that handle by one per- C. Arrangement of financial resources
son only.
D. Business that handle by partner. D. Proper utilization of funds

759. The minimum amount of capital re- 764.A allows students to work on or off
quired to ensure effective utilization campus to earn money to help pay
of fixed assets for normal operations college costs.
of the business
A. scholarship
A. Gross working capital
B. grant
B. Temporary working capital
C. federal work study
C. Net working capital
D. federal loan
D. Permanent working capital
765. PI ( NET) is calculated as
760. Factors affecting direct foreign in-
vestment A. NPV / Present Value of Cash Out-
flows
A. Tax rate on interest or dividends
B. PI (Gross) - 1
B. Potential economic growth
C. Both of the above
761. What is a fixed expense?
D. None of the above
A. an expense that changes every
month 766. Which does not belong to the group?
B. an expense that can be fixed by A. Advances to officers not currently
your budget collectible
C. an expense that is the same every B. Long-term refundable deposit
month
C. Land held for speculation
D. an expense that can be fixed by
your banker D. Prepaid Expenses

762. What is financial planning? 767. Identify this famous personality

758. C 759. D 760. B 761. C 762. B 763. C 764. C 765. C 766. D 767. A
80 Chapter 1. Financial Management

772.Which of the following is a piece

of paper that tells the bank to take
money out of your checking account?
A. debit card
B. check
C. online bill pay

A. Philip Kotler 773.If you leave a company before the

required minimum of years to retain
B. M.Y.Khan
your pension, what happens to the
C. V.Jain money?
D. None of the above A. You receive 1/2 of it when you leave
the company
768. The NCDOR e-File for and e-File for
fee website has a list of approved tax B. You receive 1/3 of it when you leave
preparation software for partici-pating the company
e-File providers. C. You receive all of the money and
A. fun can roll it into your new retirement
plan
B. free
D. You don’t receive any of the money
C. businesses
774.The controller’s responsibilities are
769. Managers’ Decisions are essential primarily in nature, while the trea-
factors. surer’s responsibilities are primarily
A. Money Has Time Value related to .

B. Risk Return Trade Off A. operational; financial management

C. Cash Flows Are Source Of Values

B. financial management; accounting
D. Market Prices Reflect Information

770. The summary of the operating, in- C. accounting; financial management

vesting and financing activities of the
firm is presented in the? D. financial management; operations
A. Statement of Financial Position
775. Capital Gain is calculated as
B. Statement of Retained Earnings
A. (Selling Price- Purchase Price) /
C. Statement of Comprehensive In- Selling Price
come B. (Purchase Price - Selling Price) /
D. Statement of Cash Flows Purchase Price

771. Feature of financial analysis is to C. (Selling Price - Purchase Price) /

present the data contained in financial Purchase Price
statements D. (Purchase Price - Selling Price ) /
A. Easy form Selling Price

B. Convenient and rational groups 776. Contains the account holder’s ac-
count number and allows money (cash
C. Comparable form or check) to be deposited into the cor-
D. All of the Above rect account.

768. B 769. D 770. D 771. D 772. B 773. D 774. C 775. C 776. B

 81
A. Debit card 782. The charge for borrowing money.
B. Deposit Slip A. Introductory rate
C. Check Regisger B. Annual Fee
D. Check C. Interest
777. A realistic and measurable way to D. Variable-rate APR
reach goals for which you must plan
and set aside resources 783. Since most business records are
stored in computers now, businesses
A. Goal no longer need to store records off-site
B. Objective for protection.
C. Value A. True
D. Need B. False

778. The process in which a company 784. This ratio shows how quickly the
buys securities in one market and sells firm can pay off its liabilities rela-
securities in another market at the tive to cash, bank balances and mar-
same time is called ketable securities since these are con-
sidered as the most liquid component
A. Homemade leverage
of the current assets.
B. Arbitrage
A. Acid-test Ratio
C. Corporate debt raising process
B. Cash Ratio
D. None of the above
C. Debt Ratio
779. Under the Post Payback Profitability
D. Current Ratio
meyhod, projects are selected based
on 785. A is a for profit financial in-
A. Total Profitabilty / Cash inflows stitution that is run by share holders.

B. Total Investment / Cash outflows A. commercial bank

C. Profitability before the payback pe- B. credit unions
riod C. retirement account
D. Profitability after the payback pe-
786. When you begin a budget, you need
riod
to first list all your regular sources of
780. True or False. Payroll records need income.
to be maintained for all full-time em- A. true
ployees, but not for part-time employ-
ees. B. false
A. True 787. A financial statement that summa-
B. False rizes the assets and liabilities (debts)
of a business.
781. Accounting is a systematic recording
A. Balance Sheet
of financial aspects of business trans-
actions B. Income Statement
A. TRUE C. Cash Flow Statement
B. FALSE D. Work Flow Analysis

777. B 778. B 779. D 780. B 781. B 782. C 783. B 784. B 785. A 786. A 787. A
82 Chapter 1. Financial Management

788. What source of funds is most appro- 793. You will likely pay more for a prod-
priate for purchasing stock in a small uct or service from a small company
shop or restaurant? than from a large one.
A. Factoring and leasing A. true
B. Mortgage and bank overdraft B. false
C. Bank overdraft and trade credit
794. Using the chart above, determine
D. Trade credit and debentures which bank pays interest on a check-
ing account.
789. Cash & Cash Equivalent -
24,890Held for Trading - 10,000Trade
and Other Receivables - 16, 000Inven-
tory - 8,960If total current liabilities
amounted to 19,900, Net Sales for the
present year amounted to 480,000
and the ending receivables totaled to
16,500. However, it was found out
that the ending inventory amounted
to 9,500 and the Cost of Goods Sold A. Federal Credit Union
totaled to 364,000. What is the aver- B. Bank of USA
age sale period?
C. Finance of America
A. 9 days
B. 10 days 795. A(n) provides a financial sum-
mary of a firm’s operating results dur-
C. 11 days ing a specified period
D. 12 days A. income statement
790. Housing and Apartment properties. B. balance sheet
A. Residential Real Estate C. statement of cash flows
B. Commercial Real Estate
D. statement of retained earnings
C. Agricultural Real Estate
796. All of the following are primary
D. Industrial Real Estate sources of income except?
791. Extended payment granted by the A. Employment paycheck
seller refers to?
B. Tips
A. Trade credit
C. Interest
B. Promissory notes
D. Loans
C. Unsecured bank loan
D. Commercial paper 797. Decisions affecting financial risk and
profitability of a business
792. How often do you need to trou-
bleshoot a computer? A. Capital
A. Daily B. Investing Decision
B. Weekly 798. What are the common parts of a
C. Whenever there is a problem. credit application?

788. C 789. A 790. A 791. A 792. C 793. A 794. A 795. A 796. D 797. A
 83
A. Name, date, reason for the loan, A. Measurable
what school you go to
B. Time-bound
B. Reason for loan, School at- C. Specific
tended(ing), where you live, documen-
tation, current debts, credit references, D. Goal
your grandparents names, bank refer- 802. How many percentages should a
ences, signature/date person save from their monthly in-
C. The names of your siblings, how come?Berapa peratuskah seseorang
much money you make, your favorite harus melakukan simpanan daripada
hobbies, your favorite music, refer- gaji bulanannya?
ences A. 5%
D. Reason for the loan, your grades B. 10%
during high school, employment his- C. 8%
tory.
D. 20%
E. Reason for loan, personal identi-
fication info, employment info, mort- 803. the table shows Mr. Alan’s family
gage/rental info, documentation, cur- expenses.calculate Mr. Alan’s variable
rent debts, credit references, collateral, expenses.
bank references, signature/date

799. Which of the following is NOT a

long-term asset?
A. Land
B. Inventory
C. Buildings A. RM 1 350
D. Equipment B. RM 1 500

800. The first step of the budgeting pro- C. RM 1 650

cess is to D. RM 1 700
A. prepare a list of each typ of in- 804. Records that name the buildings
come and expense that will be part of and equipment owned by the busi-
the budget ness.
B. calculate each type of income, ex- A. asset records
pense, and the amount of net income
B. inventory records
or loss
C. payroll records
C. explain the budget to people who
need to make financial decisions 805. A legal document that functions like
cash.
D. gather accurate financial informa-
tion A. Debit Card
B. Credit Card
801. Which of the following is not a key
component in the SMART concept for C. ATM
goal setting? D. Check

798. E 799. B 800. A 801. D 802. B 803. A 804. A 805. D 806. D

84 Chapter 1. Financial Management

806. There are 3 sections in statement of A. sales budget

cashflow, except B. record of accounts budget
A. Cash Flows from Operations C. cash budget
B. Cash Flows from Investing D. Fun Money Budget

C. Cash Flows from Financing 811. Mrs Alice’s financial goal is realistic.
She will save RM 950 a month to buy
D. Cash Flows from Equity the laptop.
807. Internet A. Specific
B. Measurable
C. Attainable
D. Realistic
E. Time-bound
812. A business should not compare its
financial performance with that of sim-
A. Revenue ilar companies.
A. True
B. Expense
B. False
808. In February 2020, Mr Daniel re-
813. Which financial statement best gives
ceived a total income of RM4 500.
an indication of a business’s net
His monthly fixed expenses and vari-
worth?
able expenses are RM2 880 and RMx
respectively. There is a negative cash A. Cash flow statement
flow of RM620. Calculate the value B. Gearing report
of x?Pada bulan Februari 2020, gaji
C. Income statement
Daniel ialah RM 4 500. Belanja tetap
dan belanja beruabahnya ialah RM 2 D. Balance sheet
880 dan RM X. Terdapat aliran tunai 814. This decision affects the liquidity
yang negatif sebanyak RM620. Sila and short term profits of the company
cari nilai bagi RM X.
A. long term investment decision
A. 1 000
B. working capital investment deci-
B. 3 500 sion

C. 2 240 C. financing decision

D. all
D. 3 880
815. Which organisation/s oversee finan-
809. Personal finance is a term that cov- cial intermediaries?
ers managing your money as well as
A. Government departments
saving and investing.
B. Venture capitalists
A. True
C. APRA
B. False D. RBA
810. Provides an estimate of cash flowing 816. Wealth Maximization is a superior
in and out of a business. objective , because it

807. B 808. C 809. A 810. C 811. D 812. B 813. D 814. B 815. C 816. D
 85
A. Considers Time Value of Money C. vagueness or ambiguity related to
the term Profit
B. Satisfies the interest of all stake-
holders D. All of the above
C. Considers risk and uncertainty 822. income generated through a one
D. All of the Above time sale of an item
A. cash outflow
817. Debt financing also called credit
based financing B. asset
A. TRUE C. capital gains
B. FALSE 823. Before a business owner completes
the business plan, he or she should ask
818. Decreases in currency values within
business experts to review the plan.
a floating rate system are called deval-
uations. A. True
A. True B. False
B. False 824. The bank agreed to loan me the
money that I needed to start my new
819. Which of the following statement is
business. My ability to borrow this
false?a. Horizontal analysis is used in
money is known as what?
the review of a company’s financial
statements over multiple periods.b. A. interest
Horizontal analysis usually depicts B. budget
percentage growth over the same line
item in the base year.c. Horizontal C. debt
analysis does not allow financial state- D. credit
ment users to easily spot trends and
growth patterns. 825. Why is the effective management of
a business’s financial resources impor-
A. b
tant in the long term?
B. a
A. It encourages a business to de-
C. c velop expensive marketing strategies.
D. All statements are false
B. It is through the effective use of
820. A is a for profit financial institu- financial resources that a business is
tion that is run by share holders. able to achieve its financial objectives.
A. Credit unions
B. commercial banks C. It is through the use of financial
resources that a business is able to
C. payday loans
obtain the best inputs.
821. Profit Maximization as an objective D. It allows a business to acquire
is criticized because highly skilled and motivated employ-
A. It dose not considers time value of ees.
money
826. Nature of business is an important
B. It satisfies only the interest of own- factor to decide requirement of fixed
ers capital.

817. B 818. B 819. C 820. B 821. D 822. C 823. A 824. D 825. B 826. A 827. B
86 Chapter 1. Financial Management

A. True A. high operating cost

B. False B. high fixed cost charges
C. high rate of dividends
827. You pay all of your bills on time.
Will your credit score go up or down? D. high debt-equity ratio

A. Down 832. The same cash flow repeated in mul-

tiple time periods in a row, is the
B. Up meaning of
C. Stay the same A. Annuities
828. If you make smart decisions, you B. Lump Sums
can make a credit card work for you. C. Deferred Annuities
A. True D. Uneven Cash Flows
B. False 833. Leverage means

829. Variable cost per unit. A. Gear box of a car

B. Capital structure
A. varies with the level of output
C. Profit and loss
B. remains constant irrespective of
the level of output D. Effectiveness

C. changes with the growth of the 834. Capital structure means the portion
firm of current assets and current liabili-
ties.
D. does not change with volume of
production A. True
B. False
830. market is where institutions can
buy and sell instruments to raise the 835. The table below shows actual cash
fund with maturity more than a year. flow of Rakesh and Monash in a cer-
tain month. Whose cash flow is better?
Explain your answer.

A. Monash’s cash flow is better be-

A. Capital cause he has a surplus of income
B. Financial B. Monash’s cash flow is better be-
cause he has a deficit of income
C. Investment
C. Rakesh’s cash flow is better be-
D. Money cause he has a surplus of income
831. Financial risk of a company increases D. Rakesh’s cash flow is better be-
because of cause he has a deficit of income

828. A 829. B 830. A 831. D 832. A 833. D 834. B 835. A 836. D

 87
836. Three main form of business orga- 841. Only lend money to friends if you
nization are the:choose the wrong an- can financially afford it.
swer A. True
A. partnership B. False
B. sole proprietorship 842. Overspending and accumulating too
C. corporation much debt can ruin your credit score
D. franchising A. True
B. False
837. Which of the following financial
goals does not meet the SMART con- 843. A set of documents that outline the
cept? essential financial facts about a new
venture
A. Save RM5 000 as registration fees
of college after 2 years A. financial plan
B. Buy a new watch worth RM500 by B. financial forecast
next year C. budget
C. Save RM2 000 to buy video games D. financial statements
by next year
844. Some credit cards offer deals like
D. Save RM5 000 to bring parents on cash back or reward points
vacation to Japan.
A. True
838. A debt evidenced by a "note" which B. False
specifies the principal amount, inter-
est rate, and date of repayment. 845. What is active saving?
A. loan A. Putting aside a portion of your in-
come first before spending it
B. principal
B. Spend your income first, then save
C. credit

839. I need to save RM 200 per month C. Spend all of your income
for six months. D. None of the above
A. Specific 846. What form do you need to complete
B. Measurable before you start a new job?
C. Attainable A. W-2

D. Realistic B. W-4
C. D-400
E. Time-bound
D. 1040EZ
840. How do we call the money brought
by shareholders? 847. What is an Annual Fee?

A. Available funds A. A yearly fee to have a bank ac-

count.
B. Equity
B. A yearly fee to have a credit card.
C. Cash
C. The interest on the money spent
D. Shareholder Liability on a credit card.

837. D 838. A 839. E 840. B 841. A 842. A 843. A 844. A 845. A 846. B
847. B 848. A
88 Chapter 1. Financial Management

848. Decisions affecting liquidity and C. As a firm matures, it may recog-

profitability of a business nize additional opportunities outside
its home country.
A. Short term
B. Long Term Investment decisions 854. Ethical behavior
849. Which analysis is considered as dy- A. is the fifth basic principles of fi-
namic : nance.
A. Horizontal Analysis B. cannot be a concern to managers
B. Vertical Analysis who are expected to maximize share-
holder value.
C. Internal Analysis
C. in the corporate world means not
D. External Analysis
breaking any laws.
850. Which of the following are all
D. is essential in business because un-
WANTS
ethical behavior destroys trust and
A. Food, Clothing, Housing business relationships.
B. Food, Video Games, Housing
855. Any outstanding bill or loan that
C. Iphone 11, Video Games, Concert must be repaid.
tickets
A. asset
851. In a way that doesn’t change
B. liability
A. Consistency
C. owner’s equity
B. Proper way
D. risk
C. Changes
D. None of these 856. Profitability ratios relate to
852. Bill is a construction worker who has A. Used to measure a company’s abil-
to have back surgery. He will be out of ity to meet long-term obligations.
work for 3 months. His disability in-
B. Closely related to sales, important
surance policy will pay him 60% of his
condition for a firm’s continuity.
salary for the entire time he is out of
work. If his salary is $3000 per month C. Return on long term debt
how much money will he receive from
his insurance company for the three D. ability to meet its short Termfinan-
months he will be out of work? cial obligations

A. $1,800 857. Evaluating your budget helps your to

B. $5,400 adjust both your budget and spending
habits to reach your goals.
C. $9,000
A. true
853. Define product cycle theory
B. false
A. Specialization by countries can in-
crease production efficiency 858. Which of the following is/are the
B. The markets for the various re- financial management process?Yang
sources used in production are "im- manakah ialah proses pengurusan ke-
perfect." wangan?

849. A 850. C 851. A 852. B 853. C 854. D 855. B 856. B 857. A 858. A
858. B 858. C
 89
A. Setting goals / Menetapkan matla- 863. The table shows Mrs Maryam’s in-
mat come and expenses.She kept 10% of
the total income and a sum of RM300
B. Evaluating financial status / Meni-
for the emergency fund. Calculate the
lai kedudukan kewangan
surplus of income of Mrs Maryam.
C. Creating financial plan / Mewujud-
kan pelan kewangan
D. Measurement offinancial flow /
Pengukuran penagihan kewangan
E. Implementing financial plan /
Melaksanakan pelan kewangan

859. One of the functions of financial A. RM 2 900

manager that includes making deci-
sions on how to fund long term in- B. RM 3 200
vestments and working capital which C. RM 3 700
deals with the day to day operations
of the company. D. RM 4 000
A. Investment Decisions 864. Which federal loans are available for
B. Financing Decisions parents to take out for their children’s
education?
C. Operating Decisions
A. Perkins Loans
D. Dividend Policies
B. Direct PLUS Loans
860. Certificate of deposit is issued by
C. Subsidized Direct Loans
A. Mutual fund companies
B. Reserve Bank of India D. Unsubsidized Direct Loans

C. Large Corporate House 865. Tom’s net income was $400. His
gross income was $440. How much
D. Commercial bank and develop-
was taken out for deductions?
ment financial institution
A. $840
861. What document is used to deter-
mine whether a business earned more B. $40
money than it spent in an accounting
C. $98
period?
D. $4
A. Statement of Cash Flows
B. Income Statement 866. Tax is a liability.
C. Balance Sheet A. TRUE
862. Malls, Hotels and Businesses prop- B. FALSE
erties.
867. Chelsea worked her way through col-
A. Residential Real Estate lege earning $15,000 per year. After
B. Commercial Real Estate graduation, her first job pays $30,000.
The total dollar amount Chelsea will
C. Agricultural Real Estate
have to pay in Federal Income taxes
D. Industrial Real Estate in her new job will:

858. E 859. B 860. D 861. B 862. B 863. A 864. B 865. B 866. A 867. A
90 Chapter 1. Financial Management

A. More than double from when she A. Income

was in college
B. taxes
B. Go up a little from when she was C. expenses
in college
D. credit card
C. Stay the same as when she was in
college 873. The Primary goal of the financial
D. Be lower than when she was in management is
college A. to maximize the return

868. The original purchase price of an as- B. to minimize the risk

set less its accumulated depreciation, C. to maximize the wealth of owners
is the meaning of
D. to maximize profit
A. Book Value
874. What is the 6th step in the financial
B. Intrinsic Value
planning process?
C. Market Value A. Develop a comprehensive financial
D. Equity Value plan

869. During the growth stage of the busi- B. Implement the plan
ness life cycle, what is the most likely C. Monitor the plan
short-term financial objective of a
business? 875. What type of expense (Fixed, Vari-
able, or Periodic) is a monthly bus
A. Profitability pass of $15.00?
B. Efficiency A. Fixed
C. Liquidity B. Variable
D. Return on investment C. Periodic
870. What is the purpose of a FICA tax? 876. Calculate the cash flow for Mr. Rab-
A. It provides health insurance for baniHitung aliran tunai Encik Rab-
people who are retired or disabled. bani.Active Income /Pendapatan Ak-
tif: RM2,000Passive Income / Penda-
B. It helps the state government fi- patan Pasif : RM350Fixed Expenses
nance education projects. / Belanja tetap : RM 2,300Variable
C. It helps local councils finance de- Expenses / Belanja Berubah : RM
velopment projects. 250Then, determine whether it is
Deficit or Surplus.Pastikan ialah lebi-
871. Major current assets include all of han atau kurangan.
the following EXCEPT
A. -200 (Deficit / kurangan)
A. cash
B. 500 (Surplus / Lebihan)
B. marketable securities
C. 200 (Surplus / Lebihan)
C. stockholders’ equity
D. -800 (Deficit / kurangan )
D. accounts receivable
877. money paid by the borrower for
872. payment for goods and services, the use of money that was loaned to
what you spend him/her

868. A 869. C 870. A 871. C 872. C 873. C 874. C 875. A 876. A 877. A
 91
A. Interest 883. Risk exists whenever actual out-
B. Debt comes can differ from expected out-
comes.
C. Loan
A. True
D. Income
B. False
878. Organizations that help businesses
raise large sums of capital through 884. Suppose bid price for S$ = $0.8 and
sale of stocks and bonds. ask price = $1.0bid/ask % spread is
A. Investment Banks A. 20%
B. Stock Options B. 25%
C. Venture Capital
C. -20%
879. Tommy has a basic account that al-
D. -25%
lows him to deposit and withdraw
money, write checks, and receive a 885. An example of a short term goal is:
monthly statement with no service
charge if he maintains a minimum bal- A. Saving for 2 months for an $80
ance of $250. What type of account outfit
is this? B. Saving for 5 years for a $3000
A. Checking Account dream vacation to Italy
B. Savings Account C. Saving for 3 years for a $1500 car
C. Retirement Plan Account down payment

880. mainly general type of Direct For- 886. the cheapest source of finance is
eign Investment (DFI) is
A. Debenture
A. Franchising
B. Equity shares
B. Patent
C. Retained earning
C. International trade
D. Bank Finance
D. Establishment of new subsidiaries
881. Which of the following agencies pro- 887. Which one is not the international
vide free credit reports for consumers? trade flows?

A. Equifax,credit unions A. Regional trade bloc

B. Credit Union, your bank B. Trade agreements
C. Experian, Credit Report Associa- C. Tariffs
tion
D. Exports and imports
D. TransUnion, Experian
888. A(n) is a charge imposed by gov-
882. Everything owned by the business
ernment to fund public services.
that has a monetary value.
A. asset A. sales tax

B. liability B. tax

C. owner’s equity C. excise tax

D. investment D. income tax

878. A 879. A 880. D 881. D 882. A 883. A 884. A 885. A 886. C 887. C
888. B
92 Chapter 1. Financial Management

889. One of the thumb rules for doing an 893. The difference between current as-
investment is sets and current liabilities is called

A. Net working capital

B. Gross working capital
C. Fixed capital
A. High risk, low profit D. Working capital
B. High return, high profit 894. The formula to calculate Gross Profit
C. High profit, low risk is:

D. High risk, high return A. COGS + Expenses

B. Sales-COGS
890. A ratio that measures the ability of
the company to meet financial obli- C. Net profit + Operating expenses
gations as they come due, without D. Revenue - Owner’s equity
disrupting the normal ongoing opera-
tions. 895. acquire something by paying for it
A. Liquidity Ratio A. interpret
B. Profitability Ratio B. purchase
C. Leverage Ratio C. credit score
D. Asset Utilization Ratio 896. An interest rate that may change de-
pending on other factors, such as the
891. Virtually all nations have a central
prime rate.
bank which are not similar to the Bank
of Canada A. Fixed-rate APR
A. True B. Introductory APR
B. False C. Interest

892. Pool of institutions and procedures D. Variable-rate APR

that facilitate transactions in all types 897. On your credit card bill you will find
of financial claims refer to
A. The current balance
B. The minimum payment due
C. The due date
D. All of these

898. The word ’entrepreneur’ means

A. Banking institutions A. a person who manages a business
B. Financial market B. a person who sets up a business

C. Money market C. a person who loans to a business

D. Ministry of finance 899. Ke stands for

889. D 890. A 891. B 892. B 893. A 894. B 895. B 896. D 897. D 898. B
899. C 900. A
 93
A. Cost of evaluation A. RM800
B. Cost of estimation
B. RM1000
C. Cost of equity capital
D. Cost of preference capital C. RM1700
E. Cost of floatation of equity shares D. RM1900
900. A financial plan can be used to at-
tract investors. 905. Worldwide trade is
A. True
A. Buying goods from abroad
B. False
901. An organization that is set up to help B. Selling goods to abroad
those in need, and may make money,
but uses it for the sole purpose to fur- C. Paying foreign currency
ther it’s goal, not to become rich.
D. All of above
A. profit business
B. non-profit business 906. If a customer pays all of her bills on
C. retail business time, then she will have
902. Which of these are "fixed" costs
A. A higher credit score
A. electricity and gas
B. wages for part time staff B. A lower credit score

C. salaries C. The same credit score

D. food costs
903. fees are typically based on plan 907. An owner of shares in a company
type, square footage, number of fire
protection devices, or reviewer’s time. A. Shareholders

A. Permit B. Employer
B. Inspection
C. Employee
C. Plan review
D. Acceptance testing and retesting D. Labour
904. Encik Jebat receives an active in-
come of RM2 800 and a passive in- 908. The movement of money into and
come of RM900 a month. He also has out of an organization
fixed expenses of RM1 800 and vari-
able expenses of RM 900 a month. A. Budget
What is Encik Jebat’s monthly cash
flow? B. Cash Flow

C. Common Stock

D. Convertible Bonds

909. Small Business

901. B 902. C 903. C 904. B 905. D 906. A 907. A 908. B

94 Chapter 1. Financial Management

913. How to calculate the cash flow in a

financial plan?
A. Income balance - Fixed expenses -
Variable expenses
B. Active income + Income balance -
Fixed expenses - Variable expenses
C. Income balance -Fixed monthly
saving - Fixed expenses - Variable ex-
penses
914. With the help of financial planning
capital can be made available at
cost.(a) (b) (c) (d)
A. More
B. Medium
C. Minimum
D. Zero

A. Asset 915. What is a budget?

B. Expense A. How much money you can spend

C. Liability B. How much money you can’t spend

910. Which objective ignore time value of 916. Which of the following are features
money but not the risk element of capital budgeting ( more than one
response required)
A. Profit Maximization
A. Reversible
B. Wealth Maximization
B. Irreversible
C. Both Profit Maximization and
Wealth Maximization C. Expectation of receiving future re-
turns
D. None of these
D. Less Risky
911. The amount of pay before all
deduc-tions refers to 917. What is the final and most important
step if you cannot pay your bills on
A. net pay time?
B. adjusted gross income A. Make budget adjustments
C. gross pay B. Make a new calendar
D. exemption pay C. Apply for more credit
912. The is the cash you give to the 918. A percentage based on income that
dealer to lower the principal amount is deducted from your paycheck by the
of the car. state government is called income
A. warranty expense tax
B. interest amount A. federal
C. down payment B. local
D. trade-in C. state

909. A 910. D 911. C 912. C 913. A 914. C 915. A 916. B 916. C 917. A 918. C
 95
919. Sources of personal funds include A. $32.50
savings, life insurance or mortgage on
B. $33.30
a house or car
C. $32.30
A. TRUE
925. The reports the revenue and ex-
B. FALSE
penses of a business for a specific time
920. The percentage of the par value of period and shows a net income or a
bonds. Paid in the form of interest. net loss.

A. Coupon interest rate A. income statement

B. Maturity B. accounts payable

C. owner’s equity
C. Indentures
D. financial statement
D. Yield to maturity
926. Net pay is also called
921. Financial planning is needed by a
small business only until it begins to A. Gross pay
make a profit B. The money I got
A. true C. Take home pay
B. false 927. Outsourcing occurs when an outside
firm performs specialized tasks for a
922. A statement that projects income
business.
and/or expenditures over a specified
future period A. True
A. Budget B. False
B. Cash Flow 928. This is not the objective of financial
management
C. Common Stock
A. wealth maximization
D. Convertible Bonds
B. profit maximization
923. Which of the following is not a fi-
nancial statement? C. minimum equity
D. adequate liquidity
A. Statememt of Financial Position
B. Statement of Profit or Loss and 929. What are assets
Comprehensive Income A. A company’s legal debts or obliga-
C. Statement of Cash Flows tions that arise during the course of
business operations.
D. Notes to Financial Statement
B. The value of an asset less the value
924. What is the amount of the coin and of all liabilities on that assets
bill combination below? C. Resources that will give companies
economic advantages in the future
D. Assets are financial products that
are easily converted to cash

930. The table used to find out present

value is

919. A 920. A 921. B 922. A 923. D 924. C 925. A 926. C 927. A 928. C
929. C 930. C
96 Chapter 1. Financial Management

A. CF Table 935. The length of time for which an em-

B. ACF Table ployee’s wages are calculated.

C. PVF Table A. Year-To-Date

D. All of the Above B. Pay Period

931. According to the Bretton Woods sys- C. Work Period

tem of fixed exchange rates, the par
D. Salary
value could only be changed on
A. approval of the BIS and only if the 936. what are the three main taxes we
country was suffering from hyperinfla- pay?
tion.
A. sales, property, and unemploy-
B. approval of the BIS and only if the ment
country was suffering a fundamental
disequilibrium of its balance of pay- B. federal income, state income, and
ments. unemployment

C. approval of the IMF and only if the C. income, property, and sales
country was suffering a fundamental D. unemployment, sales, and prop-
disequilibrium of its balance of pay- erty
ments
D. approval of the IMF and only if 937. A ratio that measures the amount of
the country was suffering from hyper- debt that a company uses to buy more
inflation. assets. An excessive ratio increases
the risk of failure, since it becomes
E. Not aware of more difficult to repay debt.
932. Financial Management in company A. Leverage Ratio
form of undertaking is called as
B. Liquidity Ratio
A. Personal Finance
B. Corporation Finance C. Profitability Ratio

C. Proprietory Finance D. Utilization Ratio

D. Public Finance 938. Expense
933. Manufacturing, Production and Stor- A. tax
age properties.
B. cost
A. Residential Real Estate
C. highly expensive
B. Commercial Real Estate
C. Agricultural Real Estate D. something you use or buy

D. Industrial Real Estate 939. Increase in current assets or de-

crease in current liabilities increases
934. Closed credit is
the current ratio
A. a one time loan
A. True
B. a plan with a changing credit limit
B. False
C. a credit card 940. When you get a job you are required
D. doesn’t go on your credit report to complete a form.

931. C 932. B 933. D 934. A 935. B 936. C 937. A 938. D 939. A 940. B 941. A
 97
A. W-2 945. Graham puts $20 in his piggy bank
every week. At the end of 39 weeks,
B. W-4 he adds $100 to the piggy bank money
C. W-10 and decides to do the following:buy
some clothes and sports gear for
D. WD-40 $314.23 buy his mom a present for
$123 divide the rest of the money
941. Examples of current liabilities are:
equally among his 3 brothers Use
A. creditors a calculator to find the amount of
money each brother will get.
B. debtors
A. $147.59
C. bank overdraft
B. $260.25
D. cash C. $293.13
942. The difference between book value 946. LaShonda works at the florist shop.
and selling price of a company goes One of her co - workers needed
on the balance sheet of the buying some time off this week, so LaShonda
company as worked 52 hours . How many hours
overtime did LaShonda work?
A. Inventory
A. 12 hours
B. Good will
B. 52 hours
C. P/E ratio C. 40 hours
D. Depreciation 947. A project has a profitability index of
1.30. What does it mean?
943. Taxes are a governmental fee that
people to pay in order to live and A. The NPV is less than zero
work in their state and the USA. B. The payback period is more than
one year
A. Required
C. That the project returns Rs. 1.30
B. Not Required for every Rs. 1 invested in project
C. Optional D. That IRR is 1.30 times that of the
Hurdle rate
944. The correct equation for pay is
E. None of the above
948. The statement of cash flows provides
insight into a firm’s operating, invest-
ment, and financing cash flows and
reconciles them with changes in its
cash and marketable securities during
the period of concern.
A. True
B. False
A. Deductions - Gross Pay = Net Pay 949. What method of payment should
John use if today’s date is 5/19/2012,
B. Gross Pay - Deductions = Net Pay
but he does not have transportation
C. Net Pay - Deductions = Gross Pay to pay in person.

941. C 942. B 943. A 944. B 945. A 946. A 947. C 948. A 949. C

 98 Chapter 1. Financial Management

A. Check 955. The two most common and impor-

tant financial records for businesses
B. Automatic Draft
are the income statement and the bal-
C. Debit Card ance sheet
950. Even though the bank usually sends A. true
a monthly statement, it is still neces- B. false
sary to check the checkbook balance
with the bank statement balance. 956. Stock Market condition is a factor
related to
A. True
A. Financing Decision
B. False
B. Dividend Decision
951. AA Enterprise borrow long term by C. Investment Decision
selling bonds RM80,000. This state-
ment shows that AA Enterprise uti- D. Financial Planning
lizes 957. When a bank is offering you a loan
A. Sources of fund and checks your history of repaying
debts, credit card bills, etc. which of
B. Uses of fund the 5 Cs are they investigating?
952. Why is making a record of with- A. Character
drawals and deposits in your check- B. Capacity
book register a good practice?
C. Collateral
A. It helps you balance your check-
book. D. Capital

B. It saves you trips to the bank. 958. In business , Risk can be through
appropriate management techniques
C. It helps you save your money. and diversification
953. For knowing the Present Value of a A. Avoided
perpetuity, we use B. Eliminated
A. PVF C. Reduced
B. PVAF D. Maximized
C. Annuity ÷ 959. Money received from the sale of
D. None of the above shares of ownership in a business is
called
954. Joanne’s dad makes $54,000 every
year. This is the amount of money A. Sales Revenue
he makes before taxes, insurance and B. Debt Capital
other deductions are taken out of his C. Equity Capital
paychecks. The amount of money he
makes before these items are taken D. Sales of Assets
out is called his - 960. The acronym COGS stands for:
A. Gross income A. cost of goods sold
B. Net income B. creditors of Goods Tax
C. Income tax C. capital outstanding GST
D. Property tax D. None of the above

950. A 951. A 952. A 953. C 954. A 955. A 956. A 957. A 958. C 959. C
960. A
 99
961. Deals with decisions that are sup- A. accounting income.
posed to maximize the value of share-
holders’ wealth B. cash flow.

A. Financial Ratios C. earnings.

B. Financial Loss D. operating profit.

C. Financial Management 965. The long-run objective of financial

D. Financial Assets management is to:
A. maximize earnings per share.
962. Use the W-2 above to answer ques-
tion. How much did Jackson pay in B. maximize the value of the firm’s
state income taxes last year? common stock.
C. maximize return on investment.
D. maximize market share.

966. A is a for profit institution

that is run by share holders.
A. commercial bank

A. $1,255.60 B. credit unions

B. $7,236.86 C. retirement accounts

C. $25,304.90 967. Money that others loan to a business

is known as:
963. Wealth maximization as the goal of
the firm implies enhancing the wealth A. Equity Capital
of
B. Debt Captial
C. Retained Earnings

968. What is F on the check?

A. signature
A. the federal government
B. purpose of the check
B. the Board of Directors
C. account number
C. the firm’s employees
D. the firm’s stockholders 969. Compares current assets (cash or
items that can be converted to cash
964. In proper capital budgeting analysis quickly) and current liabilities (debts
we evaluate incremental due within a year).

961. C 962. A 963. D 964. B 965. B 966. A 967. B 968. A 969. A

100 Chapter 1. Financial Management

A. Current Ratio
B. Quick Ratio
C. Debt Ratio
D. Net Profit on Sales Ratio
E. Operating Ratio

970. Which of the following will most

likely give you the highest returns over
a 5 year period? A. Safety stock
A. Savings account B. Reorder point

B. Checking account C. Lead time

C. Credit Card D. Total inventory cost

D. Certificate of Deposit 974. Name the major determinant of a

dividend decision
971. Eric buys a copy of his favorite video A. Growth opportunities
game for $25.70. You give the clerk
$30. How much change will you re- B. Stability of earnings
ceive? C. Earnings
A. $4.20 D. Cash flow position
B. $4.30 975. The decision influenced by com-
C. $4.40 pany’s growth opportunities is
A. dividend decision
972. Cash & Cash Equivalent -
24,890Held for Trading - 10,000Trade B. investment decision
and Other Receivables - 16, 000Inven- C. financing decisions
tory - 8,960If total current liabilities
amounted to 19,900, Net Sales for the D. all
present year amounted to 480,000 976. There is relation between oper-
and the ending receivables totaled to ational expenditures and debt financ-
16,500. However, it was found out ing
that the ending inventory amounted
to 9,500 and the Cost of Goods Sold A. Direct
totaled to 364,000. What is the inven- B. Inverse
tory turnover ratio?
C. No relation
A. 76.63
977. Choose the correct way to evaluate
B. 39.44 financial position.
C. 52.00 A. Credit statement
D. 52.04 B. Balance sheet
C. Credit flow
973. is extra inventory to prevent
stockout in the firm’s warehouse. D. Budget

970. D 971. B 972. B 973. A 974. C 975. A 976. B 977. B 978. A

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