Better Business Canadian 2nd Edition By Solomon – Test Bank

1) The strategic planning and budgeting of short- and long-term funds for current and future needs is called _____________.
a. asset allocation
Incorrect: Financial management involves the strategic planning and budgeting of short- and long-term funds for current and future needs.
b. income tracking
Incorrect: Financial management involves the strategic planning and budgeting of short- and long-term funds for current and future needs.
c. data warehousing
Incorrect: Financial management involves the strategic planning and budgeting of short- and long-term funds for current and future needs.
d. financial management
Correct: Financial management involves the strategic planning and budgeting of short- and long-term funds for current and future needs.

Answer: d
Diff: 1
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

2) Identify which of the following is a foundation of financial management.
a. conducting research on the profitability of a product
Incorrect: Tracking past financial transactions, controlling current revenues and expenses, and planning for future financial needs of the company are the foundation of financial management.
b. controlling current revenues and expenses
Correct: Tracking past financial transactions, controlling current revenues and expenses, and planning for future financial needs of the company are the foundation of financial management.
c. tracking future loans
Incorrect: Tracking past financial transactions, controlling current revenues and expenses, and planning for future financial needs of the company are the foundation of financial management.
d. planning for future markets
Incorrect: Tracking past financial transactions, controlling current revenues and expenses, and planning for future financial needs of the company are the foundation of financial management.

Answer: b
Diff: 2
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

3) Steve runs the finance department at a shipping company. The finance department usually includes which of the following divisions?
a. financial management and marketing
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.
b. accounting and financial management
Correct: In most companies, the finance department includes two divisions: accounting and financial management.
c. marketing and accounting
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.
d. accounting and shipping
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.

Answer: b
Diff: 2
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

4) Aside from the accounting division, the finance department includes the _____________.
a. information technology division
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.
b. financial management division
Correct: In most companies, the finance department includes two divisions: accounting and financial management.
c. personnel division
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.
d. sales division
Incorrect: In most companies, the finance department includes two divisions: accounting and financial management.

Answer: b
Diff: 1
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

5) Which of the following is a task of a financial manager?
a. overseeing the operations of a company
Incorrect: A financial manager oversees the financial operations of a company. Generally, he or she assumes accounting responsibilities for the company. He or she is also responsible for planning and managing the company’s financial resources.
b. assuming leadership responsibilities for the company
Incorrect: A financial manager oversees the financial operations of a company. Generally, he or she assumes accounting responsibilities for the company. He or she is also responsible for planning and managing the company’s financial resources.
c. planning and managing the company’s financial resources
Correct: A financial manager oversees the financial operations of a company. Generally, he or she assumes accounting responsibilities for the company. He or she is also responsible for planning and managing the company’s financial resources.
d. training all employees in bookkeeping and accounting skills
Incorrect: A financial manager oversees the financial operations of a company. Generally, he or she assumes accounting responsibilities for the company. He or she is also responsible for planning and managing the company’s financial resources.

Answer: c
Diff: 2
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

6) Zachary works as a financial manager at an oil drilling company. One of his tasks is to monitor the cash flow of the company. Which of the following options will Zachary achieve in monitoring the company’s cash flow?
a. He can ensure that funds owed to the company are collected efficiently.
Correct: Monitoring the cash flow of a company involves ensuring that funds owed to the company are collected efficiently. Zachary needs to monitor the cash flow to ensure that the company is accurately collecting financial data for reports and papers.
b. He can ensure that the prices of the company products are periodically raised to gain profit.
Incorrect: Monitoring the cash flow of a company involves ensuring that funds owed to the company are collected efficiently. Zachary needs to monitor the cash flow to ensure that the company is accurately collecting financial data for reports and papers.
c. He can ensure that the company’s obligations are paid in incremental amounts.
Incorrect: Monitoring the cash flow of a company involves ensuring that funds owed to the company are collected efficiently. Zachary needs to monitor the cash flow to ensure that the company is accurately collecting financial data for reports and papers.
d. He can ensure that the company uses all available funds for employee raises and bonuses.
Incorrect: Monitoring the cash flow of a company involves ensuring that funds owed to the company are collected efficiently. Zachary needs to monitor the cash flow to ensure that the company is accurately collecting financial data for reports and papers.

Answer: a
Diff: 3
Type: MC
Page Reference: 274
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

7) As a financial manager at a fast-growing software company, Alexandria knows how important it is to invest the company’s excess funds. Which of the following benefits is derived from appropriately investing the company’s excess funds?
a. The funds can be put into managers’ bank accounts.
Incorrect: Investing any excess funds will make those funds grow and be available for future developments. Alexandria can allow those funds to mature so that the company can use them at a later date.
b. The funds can be used for future development.
Correct: Investing any excess funds will make those funds grow and be available for future developments. Alexandria can allow those funds to mature so that the company can use them at a later date.
c. The funds can be distributed among the stockholders.
Incorrect: Investing any excess funds will make those funds grow and be available for future developments. Alexandria can allow those funds to mature so that the company can use them at a later date.
d. The funds can be used for organized charities.
Incorrect: Investing any excess funds will make those funds grow and be available for future developments. Alexandria can allow those funds to mature so that the company can use them at a later date.

Answer: b
Diff: 3
Type: MC
Page Reference: 272
Objective: 11.1 Summarize the implications of financial management and how financial managers fulfill their responsibilities.

8) For most large companies, a strategic plan that sets out corporate goals and objectives, is formulated by _____________.
a. the executive management team
Incorrect: In most large companies, the executive management team and the board of directors formulate a strategic plan that sets out corporate goals and objectives.
b. the board of directors
Incorrect: In most large companies, the executive management team and the board of directors formulate a strategic plan that sets out corporate goals and objectives.
c. both the executive management team and the board of directors
Correct: In most large companies, the executive management team and the board of directors formulate a strategic plan that sets out corporate goals and objectives.
d. neither the executive management team nor the board of directors
Incorrect: In most large companies, the executive management team and the board of directors formulate a strategic plan that sets out corporate goals and objectives.

Answer: c
Diff: 1
Type: MC
Page Reference: 273
Objective: 11.2 Describe how financial managers plan for financial needs.

9) Francisco is a financial manager at a brewing company in Canada. If he wishes to make sure that company funds are used optimally and that the company makes a profit, which of the following can help him achieve these goals?
a. forecasting financial needs
Correct: Financial managers must ensure that funds are used optimally and that the firm is ultimately profitable. In order to meet these objectives, they must oversee three important processes: forecasting financial needs, developing budgets and plans to meet financial needs, and establishing controls to ensure that the budgets and plans are followed.
b. developing company policies
Incorrect: Financial managers must ensure that funds are used optimally and that the firm is ultimately profitable. In order to meet these objectives, they must oversee three important processes: forecasting financial needs, developing budgets and plans to meet financial needs, and establishing controls to ensure that the budgets and plans are followed.
c. maintaining a balance between business and community interests
Correct: Financial managers must ensure that funds are used optimally and that the firm is ultimately profitable. In order to meet these objectives, they must oversee three important processes: forecasting financial needs, developing budgets and plans to meet financial needs, and establishing controls to ensure that the budgets and plans are followed.
d. establishing guidelines to ensure that the operations are carried out
Incorrect: Financial managers must ensure that funds are used optimally and that the firm is ultimately profitable. In order to meet these objectives, they must oversee three important processes: forecasting financial needs, developing budgets and plans to meet financial needs, and establishing controls to ensure that the budgets and plans are followed.

Answer: c
Diff: 3
Type: MC
Page Reference: 273
Objective: 11.2 Describe how financial managers plan for financial needs.

10) Which of the following questions do financial managers try to answer?
a. How much product do we need to sell?
Correct: Financial managers coordinate with other areas of the company to formulate answers to questions such as these: How much product do we need to sell? Do we need to expand to meet demand? Do we have the resources to expand our product line?
b. What type of resources should be used?
Incorrect: Financial managers coordinate with other areas of the company to formulate answers to questions such as these: How much product do we need to sell? Do we need to expand to meet demand? Do we have the resources to expand our product line?
c. What name should be given to the product?
Correct: Financial managers coordinate with other areas of the company to formulate answers to questions such as these: How much product do we need to sell? Do we need to expand to meet demand? Do we have the resources to expand our product line?
d. Do we have enough workers?
Incorrect: Financial managers coordinate with other areas of the company to formulate answers to questions such as these: How much product do we need to sell? Do we need to expand to meet demand? Do we have the resources to expand our product line?

Answer: c
Diff: 2
Type: MC
Page Reference: 273
Objective: 11.2 Describe how financial managers plan for financial needs.