C708 – Pre-Assessment (PPBO) Principals of Finance

Principals of Finance - C708 – Pre-Assessment (PPBO) An Introduction to Finance 1. The credit manager for a company is responsible for setting the company’s credit policy regarding availability and limits for customers. What is one of the additional responsibilities of this credit manager? YOUR ANSWER CORRECT ANSWER Investing excess cash Collecting past-due accounts Monitoring accounts payable Purchasing insurance 2. Which activity is financial management responsible for? YOUR ANSWER CORRECT ANSWER Ensuring sufficient financing is available Verifying the balance sheet is properly constructed Reporting past earnings for shares of stock Researching different products to bring to market 3. What is one of the main areas of the financial environment? YOUR ANSWER CORRECT ANSWER Investments Human resources Marketing Foreign relations YOUR ANSWER CORRECT ANSWER 4. What is a common challenge in the world of finance? YOUR ANSWER CORRECT ANSWER It generally operates with a high degree of uncertainty. It causes investor anxiety due to a volatile stock market. It is difficult to abide by generally accepted accounting principles (GAAP). It has to comply with banking regulations that are subject to change. 5. Which variable must be considered when a corporation's finance department is determining the best strategy for financing a project? YOUR ANSWER CORRECT ANSWER The amount of debt and equity financing currently in use The bid-ask spread for the company’s stock Recent changes to the federal funds rate The amount of trade credit from suppliers for the project Relating Finance to Business 6. An individual is interested in establishing a lawn care business as a sole proprietorship. What will be a disadvantage of choosing this business model? YOUR ANSWER CORRECT ANSWER Unlimited liability Frozen investments Government regulations Management disagreements 7. What is one benefit of a sole proprietorship? YOUR ANSWER CORRECT ANSWER The owner has uninterrupted control of the business. YOUR ANSWER CORRECT ANSWER The personal assets of stockholders are protected. The company can continue to exist with the death of th