Exercise 1 – Multiple Choice - Concepts

Name: ___________________________________________ Score: ________

Section: ________________________________

Instruction: Encircle the letter that corresponds to your answer.

1. It is concerned with allocating, raising and controlling the funds of the firm.
a. finance
b. management accounting
c. financial management
d. budgeting

2. It is the efficient allocation of funds to specific assets.

a. investment
b. financing
c. value
d. dividend

3. They are the owners of the utility to whom the finance manager is responsible to maximize their
value.
a. creditor
b. board of directors
c. stockholder/investor
d. supplier

4. The one responsible in making investment, financial and dividend policymaking decision of a firm.
a. stockholder
b. finance manager
c. employee
d. creditor

5. It is the minimum acceptable return in an investment proposal.

a. cost of capital
b. cost of sales
c. expected rate of return
d. answer not given

6. It is a kind of security issued by the firm to raise funds with the expectation of receiving dividends in
the future.
a. capital stock
b. stock dividends
c. bonds
d. answer not given

7. Which among the following is the objective of the financial management?

a. maximize earnings
b. maximize cash flows
 c. maximize the size of the firm
d. maximize firm value/stock price

8. One of the following is not a function of a Controller.

a. financial accounting
b. cash management
c. tax reporting
d. general accounting

9. Only one of the following is the function of the Treasurer.

a. Financial planning
b. Government reporting
c. Auditing
d. Financial accounting

10. One of the following is the ultimate goal of the Finance Manager.
a. maximize profit
b. maximize market share
c. maximize stock price
d. maximize asset