Question 1

Financial managers often shift temporary funds from chequing accounts to which of the following to earn higher interest returns?
A) administrative securities
B) commercial securities
C) marketable securities
D) strategic securities

Accepted Answer

Financial managers often shift temporary funds from chequing accounts to marketable securities to earn higher interest returns. Marketable securities are short-term, low-risk investment instruments that can be easily sold for cash, such as treasury bills, commercial paper, and certificates of deposit. They typically offer higher returns than traditional savings accounts or chequing accounts, making them a popular choice for temporary cash management.

Question 2

Commercial paper is best described by which of the following?
A) It is the same thing as accounts receivable recorded in the ledger.
B) It is a type of IOU.
C) It is typically issued by stakeholders.
D) It is a type of secured debt.

Accepted Answer

Commercial paper is a type of short-term debt instrument that is issued by corporations and other organizations as a way to raise funds quickly. It is essentially an IOU that promises to repay the holder of the instrument at a certain date in the near future. This makes it a popular option for investors who are looking for a relatively low-risk, short-term investment opportunity.

Question 3

The three most popular types of marketable securities are Treasury bills,certificates of deposit,and which of the following?
A) money market funds
B) corporate bonds
C) Treasury notes
D) commercial paper

Accepted Answer

The answer of The three most popular types of marketable...

Question 4

Making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses is called which of the following?
A) cash targeting
B) cash management
C) cash maintenance
D) cash capitalization

Accepted Answer

Cash management involves ensuring that there is enough cash on hand to cover expenses, as well as managing cash inflows and outflows to maximize financial stability and minimize the cost of holding cash. Cash targeting and cash maintenance are not widely used terms, and cash capitalization typically refers to the process of raising funds through the issuance of stock or bonds.

Question 5

Earth Worm is an independent bookstore that only eight months after opening went bankrupt due to an unexpected demand for cash to fix a leaking roof.Which of the following activities might have allowed the business to continue operation?
A) better cash maintenance
B) better cash targeting
C) better cash management
D) better cash capitalization

Accepted Answer

Better cash management would have allowed the business to continue operation by ensuring that cash was being budgeted and allocated effectively. This could have included strategies such as regular cash flow forecasting, minimizing expenses, and improving payment collection from customers. Better cash maintenance (A) may have helped prevent unexpected expenses, but it would not have addressed underlying cash flow issues. Better cash targeting (B) and better cash capitalization (D) are not relevant to the situation, as they relate to specific investment or fundraising activities rather than overall cash management.

Question 6

Which of the following is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the company's value?
A) capital evaluation
B) capital allocation
C) budget analysis
D) capital budgeting

Accepted Answer

Capital budgeting is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the company's value. It involves analyzing and evaluating potential investments, determining which projects to undertake, and allocating resources accordingly. Therefore, option D is the correct answer. Option A (capital evaluation) is not a specific term used in financial management, and option B (capital allocation) refers to the distribution of available funds among various investment options, which is a step that follows capital budgeting. Option C (budget analysis) is a broader term that refers to the process of reviewing and assessing a company's financial plan or budget, but it does not specifically relate to the selection of capital investments.

Question 7

Which of the following is a short-term unsecured debt issued by a financially strong corporation?
A) a treasury bill
B) a certificate of deposit
C) a money market deposit
D) commercial paper

Accepted Answer

Commercial paper is a short-term unsecured debt issued by financially strong corporations. Treasury bills are short-term debt securities issued by the government, certificates of deposit are time deposits in banks, and money market deposits are savings accounts with check-writing capabilities.

Question 8

Chez Dove is an independent coffeehouse/bookstore.In order to predict how much coffee it would serve,how many Styrofoam cups it would need,and how much staff it will require during July,the company would use which type of budget?
A) a cash budget
B) an operating budget
C) a centralized budget
D) a strategic budget

Accepted Answer

An operating budget is designed to estimate a company's revenue and expenses for a particular time period, such as a month or a year. As Chez Dove wants to predict how much coffee it would serve, how many Styrofoam cups it would need, and how much staff it will require during July, an operating budget would be the appropriate choice. The budget will include estimates for sales and expenses, along with staffing levels and other factors that will affect the company's operations.

Question 9

Which of the following would be an example of a capital expenditure for a superstore that specializes in outdoor grills and other items needed for outside dining?
A) a parking lot
B) cardboard sale signs
C) pens and markers
D) a handheld calculator

Accepted Answer

A parking lot would be considered a capital expenditure because it is a major, long-term investment in the store's infrastructure. The other options listed are considered operating expenses, as they are smaller, day-to-day expenses necessary for the store's operations.

Question 10

Budgets that combine sales forecasts with estimates of production costs and operating expenses to forecast profits are known as which of the following?
A) operating budgets
B) centralized budgets
C) strategic budgets
D) cash budgets

Accepted Answer

Operating budgets are created by combining sales forecasts with estimates of production costs and operating expenses, and they allow for the forecasting of profits. Centralized budgets refer to a budgeting model where a central authority creates and manages the budget for a company, while strategic budgets focus on long-term financial goals and objectives. Cash budgets, on the other hand, are focused purely on cash flow and do not take into account sales forecasts or operating expenses.

Question 11

Linda's Kitchen is a bakery.Flour,sugar,eggs,milk,and chocolate would be included in which type of expenses?
A) operating expenses
B) general expenses
C) managerial expenses
D) administrative expenses

Accepted Answer

Operating expenses are the expenses incurred in the day-to-day operations of a business, including the cost of goods sold (COGS) such as flour, sugar, eggs, milk, and chocolate in the case of a bakery. General expenses, managerial expenses, and administrative expenses are not directly related to the production and sale of goods or services.

Question 12

Which of the following are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed?
A) revolving accounts
B) credit credentials
C) credit terms
D) liability procedures

Accepted Answer

Credit terms refer to the specific repayment conditions set by a creditor, including how long customers have to pay bills and the amount of cash discount allowed. Revolving accounts refer to a type of credit account, credit credentials refer to a person's qualifications for obtaining credit, and liability procedures refer to a company's policies for handling financial responsibility.

Question 13

Funds invested in long-lived assets,such as land,buildings,machinery,and equipment,are called which of the following?
A) operating expenses
B) production costs
C) manufacturing expenses
D) capital expenditures

Accepted Answer

Funds invested in long-lived assets, such as land, buildings, machinery, and equipment, are called capital expenditures. This is because these assets are expected to generate benefits over a long period of time, and their cost is not expensed in the current period but rather capitalized and gradually expensed over their useful life through depreciation or amortization. Operating expenses, production costs, and manufacturing expenses, on the other hand, refer to the costs incurred in running a business, producing goods or services, or manufacturing products, respectively.

Question 14

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel's exacting standards,it is building a magnificent revolving restaurant overlooking the Arabian Sea.The restaurant structure is an example of which of the following?
A) a material cost
B) an account receivable
C) an operating cost
D) a capital expenditure

Accepted Answer

The construction of a new revolving restaurant is a capital expenditure, as it involves a significant investment in a long-term asset that will generate revenue for the hotel over many years. It is not an operating cost, as it is not related to the day-to-day operations of the hotel. It is also not a material cost or account receivable, as these terms refer to different types of expenses and assets.

Question 15

Short-term expenses used to support current production and selling expenses are known as which of the following?
A) operating expenses
B) managerial expenses
C) administrative expenses
D) general expenses

Accepted Answer

Operating expenses are the expenses that are incurred in the normal course of business operations, such as the costs of raw materials, rent, utilities, wages, and salaries, and are used to support current production and selling expenses. Managerial expenses, administrative expenses, and general expenses are not specific to current production and selling expenses.

Question 16

Toronto Pneumatic Tools has changed its credit terms to encourage its buyers to pay their accounts receivable more quickly.Which of the following represents the policy that the financial manager has changed?
A) credit ratings
B) account flexibility
C) credit terms
D) collection policy rate

Accepted Answer

The financial manager has changed the credit terms to encourage buyers to pay their accounts receivable more quickly. This means that the payment schedule and conditions have been altered, which is the definition of credit terms. The other options (credit ratings, account flexibility, and collection policy rate) do not accurately describe the change that has been made.

Question 17

Grainger Distribution Company sold Long Electronics 10 circuit breakers for $169.00 each.Long Electronics will be allowed 30 days to pay the bill.Grainger will carry the $1690.00 on its books as which of the following?
A) an account receivable
B) an account payable
C) a current liability
D) a fixed liability

Accepted Answer

The $1690.00 that Long Electronics owes to Grainger Distribution Company is considered an account receivable for Grainger, as they are waiting to receive payment for goods sold on credit.

Question 18

What are short-term investments that are easily converted back to cash and are used by financial managers to achieve higher returns than those offered by chequing accounts?
A) corporate securities
B) marketable securities
C) management vehicles
D) corporate equities

Accepted Answer

Marketable securities are short-term investments that can be easily converted back to cash and typically offer higher returns than chequing accounts. Corporate securities and corporate equities are not necessarily short-term and may not be easily converted back to cash. Management vehicles is not a commonly used term in finance.

Question 19

Which of the following are forecasts for outlays for fixed assets,usually covering a period of several years?
A) tactical budgets
B) operating budgets
C) capital budgets
D) monetary-policy budgets

Accepted Answer

Outlays for fixed assets are usually covered in capital budgets, which project long-term expenditures for major investments in property, plant, and equipment. Tactical budgets refer to short-term plans for achieving specific goals, operating budgets outline expected revenues and expenses for a given period, and monetary-policy budgets are not relevant to this topic.

Question 20

The Four Seasons hotel chain has purchased an existing hotel in Mumbai.To forecast how much it needs to spend to bring the facilities in line with Four Seasons' other five-star hotels,it will use which of the following?
A) a managerial budget
B) a tactical budget
C) a capital budget
D) an operating budget

Accepted Answer

A capital budget is used to forecast expenditures on long-term assets such as property, plant, and equipment. Since Four Seasons is looking to upgrade an existing hotel in Mumbai, a capital budget would be the best choice for forecasting the amount of money needed to bring the facilities in line with other Five-star hotels.

Quiz 18: Finance Maximizing the Value

Financial managers often shift temporary funds from chequing accounts to which of the following to earn higher interest returns?

Commercial paper is best described by which of the following?

The three most popular types of marketable securities are Treasury bills,certificates of deposit,and which of the following?

Making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses is called which of the following?

Earth Worm is an independent bookstore that only eight months after opening went bankrupt due to an unexpected demand for cash to fix a leaking roof.Which of the following activities might have allowed the business to continue operation?

Which of the following is the process of selecting the capital expenditures that offer the best returns and meet the goal of maximizing the company's value?

Which of the following is a short-term unsecured debt issued by a financially strong corporation?

Chez Dove is an independent coffeehouse/bookstore.In order to predict how much coffee it would serve,how many Styrofoam cups it would need,and how much staff it will require during July,the company would use which type of budget?

Which of the following would be an example of a capital expenditure for a superstore that specializes in outdoor grills and other items needed for outside dining?

Budgets that combine sales forecasts with estimates of production costs and operating expenses to forecast profits are known as which of the following?

Linda's Kitchen is a bakery.Flour,sugar,eggs,milk,and chocolate would be included in which type of expenses?

Which of the following are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed?

Funds invested in long-lived assets,such as land,buildings,machinery,and equipment,are called which of the following?

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel's exacting standards,it is building a magnificent revolving restaurant overlooking the Arabian Sea.The restaurant structure is an example of which of the following?

Short-term expenses used to support current production and selling expenses are known as which of the following?

Toronto Pneumatic Tools has changed its credit terms to encourage its buyers to pay their accounts receivable more quickly.Which of the following represents the policy that the financial manager has changed?

Grainger Distribution Company sold Long Electronics 10 circuit breakers for $169.00 each.Long Electronics will be allowed 30 days to pay the bill.Grainger will carry the $1690.00 on its books as which of the following?

What are short-term investments that are easily converted back to cash and are used by financial managers to achieve higher returns than those offered by chequing accounts?

Which of the following are forecasts for outlays for fixed assets,usually covering a period of several years?

The Four Seasons hotel chain has purchased an existing hotel in Mumbai.To forecast how much it needs to spend to bring the facilities in line with Four Seasons' other five-star hotels,it will use which of the following?