Auditing - What is the Finance and Investment Cycle

The video tutorial explains the finance and investment cycle, which includes financial planning, raising capital, and investing. It highlights the importance of financial planning in ensuring sufficient cash flow, discusses various methods of raising capital such as selling stocks, bonds, or taking loans, and covers investment in long-term and intangible assets.

What is the primary focus during the financial planning phase of the finance and investment cycle?

• Investing in intangible assets

• Purchasing long-term assets

• Selling stock and bonds

• Assessing the company's cash flow and preparing a capital budget

Why might a company need to raise capital?

• To invest in intangible assets

• To meet cash demands exceeding expected sales revenue

• To plan for future audits

• To reduce operational costs

Which of the following is NOT a method for raising capital?

• Selling bonds

• Taking out loans

• Selling stock

• Purchasing equipment

What type of assets might a company invest in during the investing phase?

• Employee training programs

• Inventory for resale

• Long-term assets like property and equipment

• Short-term liabilities

Which of the following is considered an intangible asset?

• Company vehicle

• Patent

• Machinery

• Office building