Finance Exam

Question 1

Client Services

Answer 1

Any activity provided by a vendor on behalf of a client. This can include customer service, financial management, information technology, social media support, database management, etc. The services provided to a client are agreed on by both parties and detailed in a contract unless otherwise specified.

Question 2

Internal Risk

Answer 2

The possibility of loss, damage, or injury within a business or other organizations

Question 3

Financial Records

Answer 3

The financial documentation for an individual, business or other organization. The most common records are a Cash Flow Statement, Income Statement, Balance Sheet and Tax Returns

Question 4

Securities

Answer 4

An investment tool such as bonds, debentures, notes, options, and shares

Question 5

Capital

Answer 5

Money invested in a business to generate income. Capital is also wealth in the form of asset which can be an indication of strength of an individual, business or country.

Question 6

Financial Ratios

Answer 6

Provide a comparison between financial statement items to determine the strength or weakness of a company. Most common ratios are net sales to net worth and net income to net sales.

Question 7

Cost of Goods Sold

Answer 7

This line on an income statement shows the cost of raw materials and labor to produce a finished product or service that is available to a consumer.

Question 8

Financial position

Answer 8

The status of assets, liabilities and owners equity of an individual, business or other organization as shown in its financial statements.

Question 9

External Risk

Answer 9

The possibility of loss, damage, or injury outside of a business or other organization

Question 10

Accounting

Answer 10

A system that monitors an individual, business or other organization’s financial standing. This includes recording and verifying financial information to determine a profit or loss for a given time period as well as the value of assets, liabilities and owner’s equity.

Question 11

Economies of Scale

Answer 11

An internal or external reduction in long term costs when production or operation increases in size

Question 12

Financial Information Management

Answer 12

Managing data such as credit card numbers, accounting balances or other monetary facts about an individual, business or other organization that are used when evaluating credit, loans or other financial activities.

Question 13

Costing

Answer 13

A process to determine the cost of production or operation of a business by assigning expenses to various stages of production or operations of a firm.

Question 14

Financial Globalization

Answer 14

The worldwide development of economic, financial, trade and communication integration. This pushes business executives to consider broad views in the global marketplace as countries and their economies become interconnected and interdependent.

Question 15

Customer Relationship Management (CRM)

Answer 15

This is a database of customer contacts, purchase history, and technical support. Additional elements can include profiles of potential clients, understanding and leveraging the needs of current customers, and enhanced customer service based on data analysis.

Question 16

Inventory System

Answer 16

Allows a business to maintain the optimum number of each item. In doing so, a business can operate production of a good or service, sales or customer service at a lower cost.

Question 17

Gross Revenue

Answer 17

Refers to the amount of income received by a company before any expenses are deducted.

Question 18

Data

Answer 18

Information in an unorganized form that have a relationship with current conditions, ideas or knowledge.

Question 19

Financial Institutions

Answer 19

Organizations that are public or private whom act as a channel between savers and borrowers of funds. There are two types of institutions: depository and non-depository.
Depository: organizations are usually banks or credit unions
Non-depository: organizations are often recognized as insurance companies or mutual funds.

Question 20

Financial markets

Answer 20

Maker for the sale or purchase of stocks, bonds, bills of exchange, commodities, fortunes and options, foreign currency which work as an exchange for capital and credit in the U.S. well known markets include New York Stock Exchange (NYSE), the S&P 500, and the Chicago Mercantile Exchange (CME or Merc).

Question 21

Finance

Answer 21

The process of managing money for an individual, business or other organization.

Question 22

Tax law

Answer 22

Area of law that governs taxation. A tax is a fee charged by the government in a product, service, income or activity. The internal revenue code is the name for all federal laws, which was first written in 1939 and has been revised multiple times to present day. Each state that collects a tax has their own department of taxations as well as local municipalities.

Question 23

Securities and Exchange Commission (SEC)

Answer 23

Government agency created in 1934 that is responsible for enforcing securities-related laws and setting standards for financial information about businesses that are traded on a stock exchange. The SEC has five commissions who are appointed by the president and confirmed by the senate who serve 5 year terms.

Question 24

Capital Expenditures

Answer 24

The amount spent to acquire or upgrade an asset that will increase the efficiency of the production or operations of a business for the long term.

Question 25

Transaction

Answer 25

An agreement or contract that occurs between two or more parties and established a legal obligation. This can also be defined as an exchange of goods or services between a buyer and seller.

Question 26

Financial Goal

Answer 26

Monetary objectives if an individual, business or other organization that are decided by future needs of those entities.

Question 27

Securities Information

Answer 27

Information provided regarding an investment instrument issued by a corporation, government or other organization.

Question 28

Capital Market

Answer 28

A market for demand and supply of debt and equity capital. This is highly decentralized system made up of three major parts: the stock market, bond market, and money market.

Question 29

Money market

Answer 29

A network of banks, discount houses, institutional vendors, and money dealers who borrow and lend money among themselves for the short term (90 days). Any investment has risk, but a monetary market account is considered a safe place to invest due to its short term nature.

Question 30

Database

Answer 30

The systematic organization of information that allows east updating and analysis of data.

Question 31

Budgeting

Answer 31

The process of determining a time specific financial plan for an individual, business or other organization to achieve a monetary goal.

Question 32

Compliance

Answer 32

Verification that a vendor meets the requirements of accepted practices, regulations, legislation, rules, standards and/or the terms of a contract.

Question 33

Commodities Exchange

Answer 33

An open organized marketplace where ownership titles or standard units of commodities are traded by its members.