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Chatper 18 Bus 101
1. A _____ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less.
A. near-horizon
B. short-term
C. capital expenditures
D. tactical
2. Venture capital firms look to invest their funds in firms that:
A. operate in established, mature industries.
B. present financial statements indicating stronger than average cash flows.
C. are new with great profit potential.
D. require extra funding to avoid financial difficulties.
3. This implies that:
A. Virginia's customers have very little incentive to pay within the discount period.
B. paying within 30 days will let a customer deduct 15% off the invoice price.
C. most customers will pay their bill within 2 days in order to take the maximum discount.
D. the annual financing cost of failing to pay within 15 days is about 48%.
4. Which of the following correctly identifies areas of responsibilities for a chief financial officer (CFO)?
A. accounting and finance
B. marketing and finance
C. production and accounting
D. finance and research and development
5. The interest paid on ________ financing represents a tax deductible business expense.
A. debt
B. equity
C. retained earnings D. commercial
6. A firm acquires _________ through the sale of ownership in the firm.
A. debt financing
B. liability funding C. spectator capital D. equity financing
7. A ________ refers to a line of credit that is guaranteed by the bank.
A. collateral trust fund
B. revolving credit agreement
C. contract credit agreement
D. commercial credit agreement
8. An effective budget requires:
A. a successful advertising campaign.
C. management approval.
B. accurate forecasts.
D. stakeholder consensus.
9. Successful use of financial leverage requires a firm to:
A. negotiate with lenders to establish a line of credit.
B. establish and operate a venture capital organization to minimize the use of equity financing.
C. register with the local government commission that administers market leverage.
D. earn a higher return on its investments than the interest rate it pays to acquire funds.
10. Nicole is a financial manager. Her responsibilities include preparing which of the following?
A. a cash flow analysis
B. financial statements
C. the balance sheet
D. the income statement
11. A _________ forecast predicts the future cash inflows and outflows.
A. money based
B. short-term
C. cash flow
D. long-term
12. Which of the following highlights a firm's spending plans for the purchase of major assets?
A. capital budget
B. operating budget
C. cash budget
D. surplus budget
13. By purchasing stock in Entertainment Today, Veronica has become a(n) ________ the company.
A. creditor of
B. owner of
C. general partner of
D. venture capitalist in
14. No matter the size, finance is a critical activity for:
A. profit-seeking, but not for nonprofit organizations.
B. profit-seeking and nonprofit organizations.
C. nonprofit organizations, but not for profit-seeking businesses.
D. accountants, but not for financial managers.
15. Which of the following presents an effective technique to improve cash management?
A. speed up cash payments and slow down cash collections
B. speed up cash collections and slow down cash payments
C. speed up both collections and payments of cash
D. slow down both the payment and collections of cash
16. To reduce the time and expense of collecting their accounts receivable, some firms:
A. extend credit to new customers.
B. offer extended payment plans to existing customers.
C. adopt a just-in-time inventory policy.
D. accept bank credit cards.
17. Charging interest on past due customer accounts reflects that:
A. credit sales cost more to manage than they are worth.
B. credit customers receive preferential treatment.
C. money has a time value.
D. government regulations protect customers who are late in making payments.
18. The overall objective of financial planning is to:
A. forecast the impact of technological trends.
B. prepare financial statements for managers.
C. optimize the firm's profitability.
D. establish budgets for financial control.
19. _____________ is the function in business that is responsible for acquiring funds for the firm, and
managing funds within the firm.
A. Accounting
B. Managerial accounting C. Finance D. Financial accounting
20. Financial managers identify three steps to financial planning. Which of the following is one of the three key
steps to financial planning?
A. forecasting both short-term and long-term marketing plans
B. developing human resources requirements to meet anticipated needs
C. preparing the income statement and balance sheet
D. establishing financial control to see how well the company is following the financial plans
21. Which of the following activities is most likely to be performed by a financial manager?
A. design of a marketable product that satisfies an unmet need
B. identification of specific target markets for a firm's goods
C. preparation of the balance sheet and income statement for the firm
D. analysis of the tax implications of various managerial decisions
22. Typically, only highly regarded customers of a bank receive:
A. secured loans.
B. bank premiums. C. unsecured loans.
D. commercial paper.
23. Which of these is backed only by the reputation of the issuer?
A. venture capital
B. secured bonds
C. debenture bonds D. long-term financing
Chatper 18 Bus 101 Key
1. (p. 488) B
2. (p. 503) C
3. (p. 495) D
4. (p. 484) A
5. (p. 500) A
6. (p. 493) D
7. (p. 497) B
8. (p. 488) B
9. (p. 504) D
10. (p. 486) A
11. (p. 488) C
12. (p. 488) A
13. (p. 503) B
14. (p. 485) B
15. (p. 492) B
16. (p. 492) D
17. (p. 492) C
18. (p. 487) C
19. (p. 484) C
20. (p. 487) D
21. (p. 484, figure 18.1) D
22. (p. 497) C
23. (p. 501) C
Chatper 18 Bus 101 Summary
Category
# of Questions
LG: 1
5
LG: 2
6
LG: 3
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3
LG: 5
5
LL: 1
14
LL: 2
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LL: 3
6
Nickels - Chapter 18
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