BME Financial Analysis Unit Exam

Managers use financial information to create and adjust ___. A) accounting standards. B) budgets C) mission statements D) trends

B) budgets

___ refers to the activities a business conducts to monitor its finances. A) Financial analysis B) GAAP C) Accounting D) Money matters

A) Financial analysis

How does the finance function relate to company spending? A) It plans and controls spending. B) It produces reports about spending. C) It spends on investments only. D) It does not relate to spending.

A) It plans and controls spending.

The finance function is usually responsible for which of the following processes: A) budgeting B) manufacturing C) operations D) research

A) budgeting

The cash conversion cycle should be ___. A) at equilibrium B) as short as possible C) as long as possible D) on an upward trend

B) as short as possible

Which of the following is a key component of managing working capital: A) financing B) cash conversion cycle C) capital budgeting D) capital structure

B) cash conversion cycle

For financial information to be reliable, it must also be ___. A) understandable B) complete C) relevant D) biased

B) complete

Which of the following is an example of business-related financial information: A) Accounts receivable record B) School-loan document C) Pay stub D) Sales receipt from purchasing a new mattress

A) Accounts receivable record

Assets a company already owns and can use to finance a new venture are called ___. A) equity B) return on capital C) dividends D) accounts payable

A) equity

When return on capital is positive, the company is ___. A) growing in value B) losing value C) low on cash D) paying out dividends

A) growing in value

Which type of financial statement provides information about the business's financial performance over a certain amount of time? A) income statement B) personal financial statement C) balance sheet D) cash flow statement

A) income statement

Accounting is distinct from finance because its main focus is on ___. A) recordkeeping activities B) money management decisions C) administration of assets D) acquisition of funds

A) recordkeeping activities

A manager looks at financial information and sees that the company could save money by switching to a different Internet provider. This is an example of using financial information to ___. A) reduce expenses B) create a budget C) increase sales D) plan business expansion

A) reduce expenses

A manager looks at financial information to see if the company can afford to purchase a popular new item it wants to add to its shelves. This is an example of using financial information to ___. A) manage debt B) increase sales C) check up on the competition D) reduce expenses

B) increase sales

The administration of assets refers to decisions about ___. A) accounting B) investments C) spending D) financing

B) investments

Finance is the business function that involves managing ___. A) information B) money C) production D) marketing

B) money

For financial information to be relevant, it must also be ___. A) certified by an auditor. B) timely C) digital D) perfect

B) timely

A company's current balance of assets and liabilities falls under the focus of___. A) return on capital B) working capital management C) capital investment decisions D) the cash conversion cycle

B) working capital management

If the total assets of our school-based enterprise are $50,000 and total liabilities equal $20,000, what is our net worth? A) cannot calculate B) $20, 000 C) $30,000 D) $50,000

C) $30,000

Which of the following activities is part of accounting: A) Creating financial information B) Developing marketing campaigns based on financial information C) Gathering financial information D) Making decisions based on financial information

C) Gathering financial information

Which of the following is a capital investment decision: A) How to manage cash flow B) How to handle accounts payable C) How to finance investments D) How to manage inventory

C) How to finance investments

GAAP is a system that provides accountants with ___. A) the newest technology. B) networking opportunities. C) acceptable procedures. D) professional development

C) acceptable procedures.

Money the business owes is known as ___. A) equity B) assets C) accounts payable D) accounts receivable

C) accounts payable

Decisions about financing refer to the ___. A) accounts receivable B) administration of assets C) acquisition of funds D) accounting department

C) acquisition of funds

Which type of financial statement shows the movement of cash in and out of the business over a period of time? A) profit-and-loss statement B) income statement C) cash flow statement D) balance sheet

C) cash flow statement

To keep communication flowing with other departments, the finance function depends on ___. A) accounts receivable B) marketing C) information systems D) production

C) information systems

The finance function would definitely be involved in a decision regarding ___. A) public relations and publicity B) personal selling C) new business projects and strategies D) hiring

C) new business projects and strategies

Which of the following is a reason that managers might look at financial information from another company: A) To determine how to increase sales B) To monitor their company's ongoing business operations C) To manage their company's debt D) To see how their company compares to the competition

D) To see how their company compares to the competition

Money owed to the business is known as ___. A) equity B) assets C) accounts payable D) accounts receivable

D) accounts receivable

Which type of financial statement shows the business's worth on a specific date? A) profit-and-loss statement B) income statement C) cash flow statement D) balance sheet

D) balance sheet

Determining which projects a business should invest in is known as ___. A) return on capital B) the cash conversion cycle C) capital structuring D) capital budgeting

D) capital budgeting

There may be more than one acceptable way to record and organize a piece of financial information, but it's important to ___. A) keep all paper copies of receipts. B) create your own set of accounting standards. C) make sure competitors don't find out about it. D) do it the same way every time.

D) do it the same way every time.

The finance function ensures that the company's financial goals are ___. A) acceptable to the marketing department B) related to product development C) easy to accomplish D) in line with organizational priorities

D) in line with organizational priorities

The goals of the finance function are to ensure profitability and to ___. A) advertise products B) give out information C) manufacture raw materials D) reduce risks

D) reduce risks

Which of the following is a measure of how well a business generates cash flow: A) accounts receivable B) accounts payable C) capital structure D) return on capital

D) return on capital