Chapter 7 & 8: Finance Functions & Business Finance Insights | Business Technology and Finance | Học viện Tài chính

Chapter 7: The business’s finance functions
1. Col inson plc is a medium-sized group operating at four location in the UK. It oper
centralized finance function and is concerned that the function as a whole is not perfo
well. Centralization of this finance function is least likely to be effective in:
a. External reporting to shareholders
b. Recording financial transaction c. Managing cash
d. Internal reporting to operational managers
2. Maureen is employed in the finance function of Gralam plc. Her duties are to ensur
the company always has sufficient funds available to meet both its short-term and lon
financial requirements. It is clear that Maureen is employed by Gralam plc in its:
a. Financial reporting section
b. Management accounting section
c. Treasury management section
d. Transaction processing section
3. Regarding the finance function, preparing internal reporting for planning and cont
those charged with management and governance is the main task of: a. Management accounting.
b. Recording financial transactions. c. Financial reporting. d. Treasury management.
4. Harold is an accountant with Farmworth plc. He was asked to join a project team exam
the company’s compliance with both IFRS and ISAB standards. It appears, therefore, that
Harold has been recruited into this project team to exploit his expertise in: a. Financial reporting b. Performance measurement c. Corporate governance d. Information system
5. Novel plc is establishing its accounting and finance function. The company has been
there are two purposes of published, audited financial statements. These are to help
assess how effectively managers are running a business, and to make judgements abo
likely levels of risk and return in the future. Which of the following user groups of Novel plc’s
published, audited financial statements is most likely to use accounting information for purposes? a. Community representatives b. Employees c. Shareholders d. Managers
6. When a company’s finance function prepares financial statements in accordance with legal
rules and accounting standards, it is engaged in the support activity of:
a. Record-keeping and stewardship b. Planning and control c. External reporting d. Internal reporting
7. Mainstream Ltd’s finance director is establishing an effective system in the finance function
for producing management accounting reports. Which issue should be the finance director’ primary consideration?
a. The information needs of the company's manager
b. The need for effective internal control mechanism
c. The need for cost-effectiveness
d. The need for effective information security
8. Tram plc’s finance function must provide information to management on the company’s
balanced scorecard. This role is undertaken as part of Tram plc’s:
a. Statutory audit requirement
b. Financial reporting function
c. Treasury management process
d. Performance measurement system
9. “Effectiveness”, “Economy”, and “efficiency” are often mentioned with reference to
resource use. Match these terms with the definition below:
(1) A reduction or containment of costs
(2) Achieving maximum output at minimum cost
(3) The measure of achievement by reference to objectives
a. 1 = effectiveness; 2 = economy; 3 = efficiency
b. 1 = economy; 2 = efficiency; 3 = effectiveness
c.1 = efficiency; 2 = effectiveness; 3 = economy
d.1 = economy; 2 = effectiveness; 3 = efficiency
10. Which statement about critical success factor (CSFs) for a business is true?
a. Low cost will always be a CSF; high sales revenue wil always be a CSF
b. Low cost wil always be a CSF; high sales revenue wil not always be a CSF
c. Low cost will always not be a CSF; high sales revenue will always be a CSF
d. Low cost wil not always be a CSF; high sales revenue will not always be a CSF
11. Three basic approaches to performance measures are measures of economy, efficienc
effectiveness. Economy is measured by:
a. The amount of resources used for the tasks that have been achieved
b. The success in achieving goals and targets
c. Team member satisfaction and the motivational climate
d. The success of the team or work group in control ing its costs
12. A consultant has made two statements about the primary focus of the users of fi
statements of an entity. Statement (1) – The primary focus of suppliers is on the entity’s risk
and return; Statement (2) – The primary focus of shareholders is on the entity’s solve
Identify whether each statement is true or false.
a. Statement (1) true; Statement (2) false
b. Statement (1) false; Statement (2) false
c. Statement (1) true; Statement (2) true
d. Statement (1) false; Statement (2) true
13. Tom works in the finance function of Bateman Ltd., which trades with many compa
around the world. His duties involve managing the company’s foreign exchange requirements.
From this it can be seen that Tom is employed by Bateman Ltd in its finance functions:
a. Financial reporting section
b. Management accounting section
c. Treasury management section
d. Financial transaction recording system
14. Chinward Ltd manufactures garden furniture from recycled wood and wishes to app
sustainability reporting standard issued by the Global Reporting Initiative (GRI) in sustainability reporting.
Statement (1): Under the environmental section of the report, the company should ident
total weight of wood used in the manufacture of its products in the financial period.
Statement (2): Under the social section of the report, the company should identify the n
of new workers employed in the financial period by age, gender and region. Identify wh
each statement is true or false.
a. Statement (1) true, Statement (2) false
b. Statement (1) true, Statement (2) true
c. Statement (1) false, Statement (2) false
d. Statement (1) false, Statement (2) true
15. Historical y, the role of the finance function at Delbin plc has been viewed primari
terms of reporting and control. However, the senior management team at Delbin plc ar
on for the finance function to have more role as a business partner. In which of
fol owing should members of the finance function expect to become increasingly involv
a result of the business partnering role? 1- formulating strategies
2- commercial decision making and negotiations
3- provision of accurate accounting information. a. (1) and (2) only b. (1) and (3) only c. (2) and (3) only d. (1),(2), and (3)
16. Mai is employed in the finance function. Her duties are to ensure that her company
has sufficient funds available to meet its financial requirements. Mai is in her company’s: a. Management accounting.
b. Recording financial transactions.
c. Financial reporting section.
d. Treasury management section.
17. Regarding the finance function, preparing financial statements for external users i main task of: a. Management accounting.
b. Recording financial transactions. c. Financial reporting. d. Treasury management.
18. Regarding the finance function, managing cash budgets, working capital, investment
raising long-term finance are the main tasks of: a. Management accounting.
b. Recording financial transactions. c. Financial reporting. d. Treasury management.
19. Regarding types of performance measures, the quantity of product produced in rela
the resources put in is included in: a. Profitability measures. b. Productivity measures. c. Liquidity measures. d. Solvency measures.
20. Regarding types of performance measures, “net margin of 10% on revenue of $100,000” is included in: a. Profitability measures. b. Productivity measures. c. Liquidity measures. d. Solvency measures.
21. When a company’s finance function prepares financial statements in accordance with legal
rules and accounting standards, it is engaged in the support activity of: a. Stewardship. b. Planning and control. c. External reporting. d. Internal reporting.
22. TR plc’s finance function must provide information to management on the company’s
balanced scorecard. This role is undertaken as part of TR plc’s:
a. Statutory audit requirement.
b. Financial reporting function.
c. Treasury management process.
d. Performance measurement system.
23. In the balanced scorecard, measures of profit margins and return on capital wou included in:
a. Financial perspectives measures.
b. Customer perspectives measures.
c. Internal business process perspectives measures.
d. Innovation and learning perspectives measures.
24. Regarding the measure of resource use, which of the fol owing is the definitio “Economy”:
a. A reduction or containment of costs.
b. Achieving maximum output at minimum cost.
c. The measure of achievement by reference to objectives.
d. The level of performance for the business to outperform rivals.
25. Regarding the measure of resource use, which of the fol owing is the definitio “Efficiency”:
a. A reduction of containment of costs.
b. Achieving maximum output at minimum cost.
c. The measure of achievement by reference to objectives.
d. The level of performance for the business to outperform rivals.
26. Regarding the measure of resource use, which of the fol owing is the definitio “Effectiveness”:
a. A reduction of containment of costs.
b. Achieving maximum output at minimum cost.
c. The measure of achievement by reference to objectives.
d. The level of performance for the business to outperform rivals.
27. Which of the fol owing characteristics belongs to management accounting informati
a. It is governed by legal regulation.
b. It is primarily used by shareholders.
c. It is likely to include a cash flow forecast.
d. It is likely to include a statement of cash flows.
28. When the finance function works alongside other business functions rather than b
separate function of their own, it means: a. Financial innovation. b. Business partnering. c. Business analysis. d. Financial reporting.
29. Management of working capital is the function of which section? a. Financial reporting. b. Treasury management. c. Management accounting.
d. Recording financial transactions.
30. Managers use performance measurement for:
a. Making investment decisions on buying a stock.
b. Expanding loans for a company. c. Controlling and planning.
d. Making investment decisions on selling a stock.
31. Managing the company’s foreign exchange requirements belongs to which of the following
section in the finance function?
a. Financial reporting section.
b. Management accounting section.
c. Treasury management section.
d. Financial transaction recording section.
32. Thu works in the finance function of AB Ltd. Her duties involve maintaining the s
ledger and providing information to the credit control department. Thu is employed by A in its finance function’s:
a. Management accounting section.
b. Financial transactions recording section.
c. Financial reporting section.
Chapter 8: Business finance
1. Regarding the business’s need for finance, funds for paying wages and day-to-day expens are to fulfil : a. Immediate needs. b. Short-term needs. c. Medium-term needs. d. Long-term needs.
2. Regarding the business’s need for finance, funds for non-current assets, such as machinery
vehicles, and buildings, are to fulfil : a. Immediate needs. b. Short-term needs. c. Medium-term needs. d. Long-term needs.
3. In relation to a listed company that is raising new finance, an offer for the sale of sto a form of: a. Public offering. b. Factoring. c. Borrowing. d. Retained earnings.
4. Which of the fol owing is NOT the source of equity finance? a. Retained earnings. b. Preference shares. c. Overdraft. d. New issues of shares.
5. Which of the fol owing is a source of debt f n i ance? a. Leasing. b. Rights issues of shares. c. Retained earnings. d. Preference shares.
6. A bank undertakes to store and take reasonable care of a customer’s property and to re-
deliver it to the customer when required. In regard to the bank and customer relations
which capacity the bank is acting: a. Mortgagor. b. Bailee. c. Mortgagee. d. Bailor.
7. Which of the fol owing statements concerning preference shares is correct?
a. Preference shares carry the same voting rights as ordinary shares.
b. Preference shares carry the right to a fixed rate of dividend each year.
c. The payment of a preference share dividend is guaranteed each year.
d. Preference shares are always a type of debt capital. 8. Which of the fol owing f n
i ancial instruments are available from commercial banks? a. Gilts. b. Commercial paper. c. Certificates of deposit. d. Treasury bills. 9. Regarding f n
i ancing exports and trading risks, the possibility of payment default b customer is: a. Physical risk. b. Credit risk. c. Trade risk. d. Liquidity risk.
11. Which of the fol owing is an example of an institutional investor? a. The Bank of England.
b. The Financial Reporting Council.
c. The Financial Conduct Authority. d. A unit trust.
12. A market where new securities are bought and sold for the f rist time is known as: a. A futures market.
b. A secondary capital market. c. A primary capital market. d. A money market.
13. To pay for an increase in inventory and receivables, a f rim needs: a. Short-term finance. b. Medium-term finance. c. Long-term finance. d. Permanent finance.
14. Capital is made up of current assets minus current liabilities is cal ed: a. Working capital. b. Working assets. c. Current assets. d. Physical assets.
15. Using a higher percentage of short-term f n i ance can:
a. Reduce the cost of capital but higher interest rate risk.
b. Increase the cost of capital but higher interest rate risk.
c. Reduce the cost of capital but lower interest rate risk.
d. Increase the cost of capital but lower interest rate risk.
16. A firm has $100 mil ion in current liabilities and $80 mil ion in current assets. The cur ratio of the f rim is: a. 0.8 b. 1.0 c. 1.25 d. 1.5
17. In an average matching business, permanent current assets are financed by: a. Short-term trade credit. b. Short-term debt. c. Overdrafts. d. Long-term debt. 18. If a company identif es i
a short-term surplus of cash, it should: a. Distribute to customers.
b. Buy a vacation for managers.
c. Invest in various financial products in the money markets.
d. Pay for fixed asset acquisition.
20. Which of the fol owing statements is most likely TRUE about a bank: a. A manufacturing unit. b. A commercial company. c. A financial intermediary. d. A public organization.
21. Carrying out monetary and ensuring f n
i ancial stability is the role of: a. Commercial banks. b. Retail banks. c. Unit trusts. d. Central banks.
22. When a bank borrows the customer’s deposits and undertakes to repay them, this refers to
which of the contractual relationship between a bank and a customer? a. Bailor and bailee. b. Principal and agent. c. Receivable and payable. d. Mortgagor and mortgagee.
23. When a bank accepts the customer’s property for storage in its safe deposit, this refers to
which of the contractual relationship between a bank and a customer? a. Bailor and bailee. b. Principal and agent. c. Receive and payable. d. Mortgagor and mortgagee. 24. LIBOR stands for:
a. Lending Internal Business of Railway.
b. London Inter-Bank Offered Rate.
c. Loan Interest Bidding Over Rate.
d. Lending Interest Board Offered Range.
25. Which of the fol owing is internal and the most important source of equity f n i ance? a. New share issuance. b. Right issues. c. Retained Earnings. d. Convertible bonds.
26. Which of the fol owing is external and the least important source of equity f n i ance? a. New share issuance. b. Right issues. c. Retained Earnings. d. Convertible bonds.
27. A company issues a bond with a par value of $1,000 and a f x i ed coupon rate of 5
annum, paying interest annual y. The interest payment for bondholders is: a. $1,000 b. $500 c. $50 d. $0
28. In the banking system, secondary banks are also known as: a. Clearing banks. b. Commercial banks. c. Retail banks. d. Merchant banks.
29. A problem of going public is:
a. Possibility of being taken over. b. Concentration of control.
c. Minimization of the costs of control and reporting systems.
d. Access to large sources of finance.
30. Debt capital in the form of securities issued by companies, the government and authorities is: a. Bank Overdraft. b. Common shares. c. Factoring. d. Loan stock.
31. Financial instruments issued by large companies, which can be held to maturity or s
a third party before maturity, are: a. Treasury bills. b. Certicate of Deposit. c. Bonds. d. Commercial paper.
32. Which of the fol owing statements correctly describes the coupon rate of a debt instru
a. It is the interest charge payable on the debt instrument.
b. It is the amount repayable at the end of the term of the debt instrument.
c. It is the credit risk of the debt instrument.
d. It is the amount payable on the debt instrument in excess of the Bank of England’s base rate.
33. A family-owned removal company has liquidity problems and needs an injection of f
From the fol owing list identify which would be classified as a source of short-term f n i for this company? a. Share capital. b. Bank loan. c. Factoring. d. Commercial mortgage.
34. ABC plc has recently sent goods to its first non-UK customer but has taken out insu
because it is worried about the possibility of a payment default. What type of risk does non-payment represent? a. Physical risk. b. Credit risk. c. Trade risk. d. Liquidity risk.
Chapter 11: Governance and ethics
1. The agency problem concerns the misalignment in interests and conflicts of interest between:
A. banks and financial markets
B. regulators and professional bodies C. government and industry D. directors and shareholders
2. In a company with weak corporate governance managers may be able primarily to p
their own rather than the company's interest because, in relation to shareholders:
A.They have more information and high levels of accountability
B.They have less information and high levels of accountability
C.They have more information and low levels of accountability
D.They have less information and low levels of accountability
3. In comparison with the corporate and the public policy perspectives on corp
governance, the stakeholder perspective places at least emphasis on: A. accountability
B. alignment of interests of shareholders and other stakeholders C. good information D. efficient use of resources
4. Good practice in corporate governance requires openness and
transparency should be supported by:
A. reducing the potential for conf ilcts of interest B. disclosure of information
C. reconciling the interests of shareholders and directors
D. judging performance of directors on the basis of return on investment
5.In countries with a dual board structure, the supervisory board is elected by: A. shareholders only B. employees only C. shareholders and employees
D. shareholders, employees, and members of the management board
6. Business ethics are primarily moulded by the expectation of: A. directors B. customers C. government D. society
7. Which three of the fol owing attributes are identif ed i
by the Institute of Business Eth
being typical ethical business leaders? A. fair mindedness B. honesty C. ability to listen D. empathy E. accountability 8. In a market-based f n i ancial system, the f n
i ancial system wil be characterized by:
A. comparatively more government regulation than a bank-based system
B. comparatively less close relationship between banks and businesses than in a b based system
C. comparatively more risk averse households than in a bank-based system
D. households with less access to investment in physical assets than in a bank-b system
9. In the country of Zanadu, the population has a risk-seeking attitude towards f n i a matters. Zanadu's f n
i ancial system is likely to be: A. a market-based system B. a stakeholder system C. a bank-based system D. a public policy system
10. In seeking to address the problem of the separation of ownership and control, co
governance attempts to align the interest of which of two of the fol owing stakeholders A. Investors B. Employees C. Regulators D. Managers E. Auditors
11. Woolmer plc adopts corporate responsibility as a key element in its strategies. Thi
mean that the company seeks to:
A. meet the minimum obligations it owes to stakeholders
B. exceed the minimum obligations it owes to stakeholders
C. meet the minimum obligations it owes to shareholders
D. exceed the minimum obligations it owes to shareholders
12. The stewardship approach to corporate governance requires directors of limited companies:
A. to act al times in the best interest of the company
B. to al ow shareholders to see detailed accounting records on request
C. to hold regular monthly meetings to answer shareholders' questions
D. to consult the shareholders over diff c i ult management decisions
13. The board of directors of Lake plc is concerned that the current chief
executive's actions are undermining the ethical culture at the company. She
fails to listen to the concerns of managers about unfair treatment of suppliers,
and she has failed to learn from a recent scandal in which the company was
fined for data protection breaches. To improve the ethical culture at Lake plc,
Which of the fol owing is the most important action for the board to take?
A. Draft a code of business ethics for Lake plc's employees
B. Rewrite Lake plc's policies regarding suppliers and customers
C. Demonstrate leadership by encouraging Lake plc's chief executive to be more o
D. Brief shareholders more ful y about Lake plc's incentive scheme for managers
14. Which of the fol owing is a list of the f v
i e key elements of good corporate governance?
A. Board of directors, senior management, employees, external auditors, inte auditors
B. Senior management, shareholders, employees, external auditors, internal audito
C. Board of directors, senior management, shareholders, external auditors, inte auditors
D. Senior management, stakeholders, external auditors, internal auditors, government regulators
15. A director of a corporation is best characteristics as a: A. agent B. trustee C. f du i ciary D. principal
16. How entities are systematical y directed and control ed refers to which of the fol owing? A. corporate governance B. sustainability C. agents D. internal controls
17. The CEO of American Foods has made a variety of signicant investments that
changed the firm's focus and diminished share value. One of American Foods' shareho
has aggressively been acquiring shares and now owns 10%. The shareholder has nom
Erik Sorenson to the board of directors in an attempt to oversee manager actions. Alt
Sorenson could ask for the manager's resignation, he prefers that the manager makes
that enhance f rim value. This type of motivation is known as: A. Performance share B. Executive stock options C. Direct intervention D. The threat of f riing
18. The agency problem concerns the misalignment in interests and conf ilcts of int between: A. banks and f n i ancial markets.
B. regulators and professional bodies. C. government and industry.
D. directors and shareholders.
19. From the public policy perspective, which of the fol owing is NOT the main aim
corporate governance to ensure that the company meets?
A. The objectives of its shareholders.
B. The interests of other individuals and groups with a direct ‘stake’ in the company.
C. The interests of the public at large.
D. The best personal interests of its directors.
20. Which of the fol owing is NOT true about the aim of corporate governance? Corp
governance is to ensure that the company meets:
A. The objectives of its shareholders.
B. The interest of other individuals and groups with a direct “stake” in the company.
C. The interests of the public at large.
D. The interest of only managers.
21. Which of the fol owing is NOT the symptom of poor corporate governance? A. Adequate control function.
B. Lack of independent scrutiny by external or internal auditors.
C. Lack of contact with shareholders. D. Domination of the board.
22. A German company, Albrecht AG, has a dual board structure for its board of direc
This means that, in addition to the supervisory board, the company also operates a: A. Unitary board. B. Management board. C. Non-executive board. D. Auditing board.
23. “Getting things done right” mentions: A. Governance. B. Public relationship. C. Management. D. Customer Care.
24. Which of the fol owing is NOT a perspective on corporate governance? A. Public policy perspective. B. Stakeholder perspective. C. Stewardship perspective. D. Management perspective.
25. The stewardship perspective on corporate governance requires senior management
A. Ensure the interest of the public at large.
B. Balance between economic and social goals.
C. Achieve long-term sustainable value for shareholders.
D. Act as the stewards of the company’s resources. 26. Market-based f n
i ancial systems are NOT characterised by:
A. Households bear more risk and so hold more equity.
B. Households have greater access to investments in physical assets.
C. Markets are more important than banks for long-term finance.
D. Banks have close relationships with the businesses they lend to.
161. The agency problem underlies the need for sound corporate governance. In this c
the “agents” are the company’s: a. Customers. b. Shareholders. c. Directors. d. Auditors.
162. The agency problem underlies the need for sound corporate governance. In this c
the “principal” in this agency relationship is: a. customers. b. shareholders. c. managers. d. directors.
163. In seeking to address the problem of the separation of ownership and control, co
governance attempts to align the interest of which of the fol owing pair of stakeholders
a. Shareholders and Regulators. b. Shareholders and Managers. c. Managers and Regulators. d. Shareholders and Auditors.
164. Which of the fol owing is concerned with overal control to ensure that the compan
achieve its objectives in an acceptable and sustainable way? a. Governance. b. Management. c. Marketing. d. Financing.
165. How entities are systematical y directed and control ed refers to which of the fol ow a. Corporate governance. b. Sustainability. c. Agents. d. Internal controls.
166. The agency problem concerns the misalignment in interests and conflicts of in between:
a. banks and financial markets.
b. regulators and professional bodies. c. government and industry.
d. directors and shareholders.
167. From the public policy perspective, which of the fol owing is NOT the main aim
corporate governance to ensure that the company meets?
a. The objectives of its shareholders.
b. The interests of other individuals and groups with a direct ‘stake’ in the company.
c. The interests of the public at large.
d. The best personal interests of its directors.
168. Which of the fol owing is NOT true about the aim of corporate governance? Corp
governance is to ensure that the company meets:
a. The objectives of its shareholders.
b. The interest of other individuals and groups with a direct “stake” in the company.
c. The interests of the public at large.
d. The interest of only managers.
169. Which of the fol owing is NOT the symptom of conflicts between stakeholders’ interests?
a. Financial collapse without warning.
b. Directors trying to disclose the true financial performance of the company.
c. Disputes over directors’ remuneration such as huge salaries, bonuses. d. Empire building.
170. Which of the following is NOT the perspective on corporate governance?