Financial Management Test

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Financial Management Test - 19

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Weekly Quiz Competition

Question 1
1 / -0

"Business finance includes those business activities which are concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprise." This definition is given by _____________.

A
B.O. Wheeler

B
Howard and Upton

C
ICSI

D
ICAI

Solution

According to the Wheeler, “Business finance is that business activity which concerns with the acquisition and
conversation of capital funds in meeting financial needs and overall objectives of a business enterprise”. According
to the Guthumann and Dougall, “Business finance can broadly be defined as the activity concerned with
planning, raising, controlling, administering of the funds used in the business”.
Corporate finance is concerned with budgeting, financial forecasting, cash management, credit administration,
investment analysis and fund procurement of the business concern and the business concern needs to adopt
modern technology and application suitable to the global environment.
Question 2
1 / -0

Which of the following is said to be the lifeblood of an organization?

A
Debentures

B
Finance

C
Material

D
Goodwill

Solution

Finance is regarded as the lifeblood of a business enterprise. It is the basic foundation of all kinds of economic activities. Finance is the master key that provides access to all the sources for being employed in manufacturing and merchandising activities. The success of an organization largely depends on the efficient management of its finances.
Hence, option (B) is the correct answer.
Question 3
1 / -0

Finance represents ___________ requirements of an organization.

A
long-term

B
short-term

C
both (A) and (B)

D
neither (A) nor (B)

Solution

Finance is defined as the management of money and includes activities like investing, borrowing, lending, budgeting, saving, and forecasting.
Financing is a very important part of every business. Firms often need financing to pay for their assets, equipment, and other important items. Financing can be either long-term or short-term. As is obvious, long-term financing is more expensive as compared to short-term financing. There are different vehicles through which long-term and short-term financing is made available.
The common sources of financing are capital that is generated by the firm itself and sometimes, it is capital from external funding sources, which is usually obtained after issuance of new debt and equity.
A firm’s management is responsible for matching the long-term or short-term financing mix. This mix is applicable to the assets that are to be financed as closely as possible, regarding timing and cash flows.
Question 4
1 / -0

Statement I : The liability of members of co-operative society remains limited to the extent of capital contributed by them.
Statement II : The members of co-operative society are personally liable to pay the liability of co-operative society.
Select the correct answer from the options given below:

A
Both 1 and 2 are true

B
2 is true but 1 is false

C
1 is true but 2 is false

D
Both 1 and 2 are false

Solution

Statement I : The liability of members of co-operative society remains limited to the extent of capital contributed by them- this is a true statement the liability of them is proportionate to the capital contributed by them.
Statement II : The members of co-operative society are personally liable to pay the liability of co-operative society- this is a false statement. They are not liable personally.
Question 5
1 / -0

______ means pre-estimating financial needs of an organization to ensure availability of adequate finance.

A
Financial planning

B
Material planning

C
Value chain planning

D
Capital structure decision
Solution
Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.
Financial Planning has got many objectives to look forward to:
Determining capital requirements- This will depend upon factors like cost of current and fixed assets, promotional expenses and long- range planning. Capital requirements have to be looked with both aspects: short- term and long- term requirements.
Determining capital structure- The capital structure is the composition of capital, i.e., the relative kind and proportion of capital required in the business. This includes decisions of debt- equity ratio- both short-term and long- term.
Framing financial policies with regards to cash control, lending, borrowings, etc.
A finance manager ensures that the scarce financial resources are maximally utilized in the best possible manner at least cost in order to get maximum returns on investment.
Question 6
1 / -0

"Finance may be defined as that administration area or set of administrative functions in an organization may have the means of carrying out its objectives as satisfactorily, as possible." This definition is given by-

A
B.O. Wheeler

B
Howard and Upton

C
ICSI

D
ICAI

Solution

Finance may be defined as the art and science of managing money. It includes financial service and financial instruments. Finance also is referred as the provision of money at the time when it is needed. Finance function is the procurement of funds and their effective utilization in business concerns.

According to Howard and Upton, “finance may be defined as that administrative area or set of administrative functions in an organization which relates with the arrangement of each and credit so that the organization may have the means to carry out the objectives as satisfactorily as possible".
Question 7
1 / -0

Financial Management is concerned with -
A.Investment decisions.
B. Labour turnover decisions.
C. Financing decisions.
D.Personnel policy decisions.
E.Dividend decisions.
Select the correct answer from the options given below.

A
D B & C

B
A C B & E

C
A and C only

D
E C & A
Solution
Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions.
Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.
Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:
Dividend for shareholders- Dividend and the rate of it has to be decided.
Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.
Question 8
1 / -0

_____is nothing but management of limited financial resources the organization has, to its utmost advantage.

A
Material management

B
Cash management

C
Customer management

D
Financial management

Solution

Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets are also a part of investment decisions called as working capital decisions.
Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.
Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:
Dividend for shareholders- Dividend and the rate of it has to be decided.
Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.
Question 9
1 / -0

____ can be done to compute and analyze financial statements.

A
Internal audit

B
Standard costing

C
Ratio analysis

D
Zero base budgeting

Solution

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance in several key areas. The ratios are categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and Market Value Ratios.
Question 10
1 / -0

Business is concerned with the production and distribution of goods and services _______.

A
for charity

B
for the satisfaction of needs

C
for selling

D
for society

Solution

Any kind of business revolves around the production and distribution of goods and services for the satisfaction of the needs of consumers in the target market. Satisfying these needs of the public will help business to earn profits and supplements the growth of the business.

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Financial Management Test - 19

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Financial Management Test - 19

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Question 1

B.O. Wheeler

Howard and Upton

ICSI

ICAI

Solution

Question 2

Debentures

Finance

Material

Goodwill

Solution

Question 3

long-term

short-term

both (A) and (B)

neither (A) nor (B)

Solution

Question 4

Both 1 and 2 are true

2 is true but 1 is false

1 is true but 2 is false

Both 1 and 2 are false

Solution

Question 5

Financial planning

Material planning

Value chain planning

Capital structure decision

Solution

Question 6

B.O. Wheeler

Howard and Upton

ICSI

ICAI

Solution

Question 7

D B & C

A C B & E

A and C only

E C & A

Solution

Question 8

Material management

Cash management

Customer management

Financial management

Solution

Question 9

Internal audit

Standard costing

Ratio analysis

Zero base budgeting

Solution

Question 10

for charity

for the satisfaction of needs

for selling

for society

Solution

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