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Exam 18: Financial Management

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Question 31

Multiple Choice

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Drew's work in the finance department of his firm consists of checking accounting records and financial statements to verify that proper procedures are followed.Drew serves his company as a(n) :

A) internal auditor.
B) comptroller.
C) CPA.
D) financial advisor.

E) All of the above
F) None of the above

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Question 32

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Commercial paper is unsecured short-term debt.

A) True
B) False

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Question 33

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Generally accepted accounting principles require that any assessment of a firm's financial statements be performed by independent outside auditors.

What is equity financing? Identify and describe the major sources of equity financing.

Identify and describe three types of short-term financing.

Investors and entrepreneurs should have an understanding of financial issues.

A _________ forecast predicts the revenues,costs,and expenses a firm will incur for a period longer than one year.

A firm's short-term financial forecast provides a projected sales estimate.

With plans to build a $50 million theme park,Extreme Entertainment,Inc.intends to finance this project through the sale of additional shares of ownership in their firm.Selling new shares of stock represents ___________ financing.

Finance managers need funds for capital purchases,but seldom for the day to day operations.

Family and friends represent "problem free" sources of financing for most small businesses.

White Palace operates a chain of restaurants specializing in hamburgers.The corporation plans to expand to new communities.The acquisition of land and construction of new restaurants represent major capital expenditures.

Based on the time value of money,$100 received a year from today is worth more than $100 received today.

A firm negotiates a(n) _________ with its bank.This arrangement gives the firm access to a specified amount of unsecured short-term funds,provided the bank has the funds available.

Budgets assist managers in performing the functions of planning and control.

Many small businesses rely on factoring as a source of short-term financing because:

Big Ticket Technologies holds commercial paper issued by Prude Insurance Corporation that matures in 180 days.However,shortly after Big Ticket purchased the commercial paper,Prude Insurance went out of business.The finance manager for Big Ticket is not worried because his loan to the corporation is secured by collateral that he can now claim.

While finance is a critical activity for profit-seeking organizations,by definition nonprofit organizations are not required to fulfill the finance function.

Corporations that issue debenture bonds are required to provide collateral.

Which of these statements about corporate bonds is correct?