Mid-Term Test in Business Finance 12

Which of the following is NOT an objective of financial planning?

• to ensure the availability of funds when required

• to see to it that the firm does not raise resources unnecessarily

• to ensure that the Board of Directors will receive the highest salary

• to secure adequate funding for short term and long term projects

Finance is concerned with management, allocation and utilization of resources. Which of the following statements BEST describes allocation?

• action of making effective use of money

• methodical handling of business resources

• strategic planning to obtain financial resources

• efficient distribution of financial resources to different areas

Finance Managers are concerned with the financing, operating, and investing decisions of the company. Which of the following is an example of an operating decision?

• borrowing funds

• declaring dividends

• buying and selling of goods

• placing money in stocks and bonds

Which of the following is NOT an immediate qualification for a Finance Officer?

• must have technical expertise in finance

• must be a Certified Public Accountant (CPA)

• must be ethically and morally upright and socially responsible

• must possess sound knowledge of accounting and economic principles

Which is the highest policy-making body in a corporation?

• President

• shareholders

• Board of Directors

• Vice President for Operation

What type of cost is paid to workers who are directly involved in making the product?

• direct labor cost

• indirect labor cost

• factory overhead

• salaries and wages

Which of the following refers to a plan expressed in monetary value?

• budget

• forecast

• projections

• pro-forma financial statement

What is the first step in making financial projections?

• preparation of cash budget

• preparation of sales forecast

• preparation of production forecast

• preparation of raw material budget

Which of the following budgets provides information regarding the number of units that should be produced based on expected sales and targeted levels of inventories?

• sales budget

• production budget

• cash budget

• inventory budget

In what financial activity does acquisition and disposal of long-term investments belong?

• operating activities

• financing activities

• investing activities

• planning activities