T Or F

Question 1

Financial statements are needed in the analysis of financial ratios

Answer 1

True

Question 2

Liquidity ratios can detect whether the firm is able to pay it’s grand financial obligation using its current assets

Answer 2

True

Question 3

Profitability ratios can measure the ability of the firm to generate income to cover expenses

Answer 3

True

Question 4

Financial ratios made from audited financial statements are not reliable

Answer 4

True

Question 5

Financial ratios alone without any interpretation will enable managers to make decisions

Answer 5

False

Question 6

Planning is no longer needed when the resources of the firm are bounteous

Answer 6

False

Question 7

Budgeting helps in the control the operations of the firm

Answer 7

True

Question 8

Budgeting tends to synchronize the firms operations because the budget serves as a guide as to what a company should achieve

Answer 8

True

Question 9

The components in the budget manual are needed to facilitate the preparation of the budget

Answer 9

True

Question 10

Top management does not have to formulate directives to come up with the budget estimates

Answer 10

False

Question 11

The sales projection is the basis for determining the number of units to be sold

Answer 11

True

Question 12

The budget has to be approved by the board of directors before it can be implemented

Answer 12

True

Question 13

It is the corporate planning department that consolidates the individual budgets to come up with the draft master budget

Answer 13

True

Question 14

The heads and supervisors are involved in the preparation of individual budgets to be consolidated to create a master budget

Answer 14

True

Question 15

The financial manager has a role to play in the preparation of the master budget

Answer 15

True

Question 16

The sales budget is considered the cornerstone of budgeting

Answer 16

True

Question 17

Budgeting can help in coordinating the activities of the firm

Answer 17

True

Question 18

There is a need to create schedules of production, selling, administrative and other expenses

Answer 18

True

Question 19

A pro forma income statement uses the schedules of sales and various expenses

Answer 19

True

Question 20

A proforma cash budget can be created using the estimated cash receipts and cash disbursements

Answer 20

True

Question 21

Approve form a cash budget and pro forma income statement are needed in the preparation of proforma statement of financial position or balance sheet

Answer 21

True

Question 22

As a primary step in making decisions involving capital outlays the financial managers should use tools of time value of money analysis

Answer 22

True

Question 23

It is correct to compare the present value of capital outlay and a future value of the capital outlays

Answer 23

False

Question 24

There is no sense comparing present value the amount and future valued amount

Answer 24

True

Question 25

At a certain rate of interest your 100,000 will be higher 5 years from now

Answer 25

True

Question 26

The present value is the opposite of future value

Answer 26

True

Question 27

To find the future value of an amount at the rate of 7% for the 5 years just multiply the amount by 1.07 5 times

Answer 27

True

Question 28

The process of computing the future value of a single amount and several equal amounts is the same

Answer 28

False

Question 29

The future value with several amounts considered as ordinary annuity and considered as annuity due are the same

Answer 29

False

Question 30

In finding the present value of an annuity due with just reverse the treatment for the future value of an annuity due

Answer 30

True

Question 31

The only difference between the ordinary annuity and the annuity due is that in the annuity due the investment or payment is done at the beginning of the year

Answer 31

True

Question 32

The investments or payments made involves several equal amount and several uneven amounts

Answer 32

True

Question 33

The future value of uneven cash payment or receipt is called terminal value

Answer 33

True

Question 34

In assessing returns of investment or loan values it is important for firms to have a common basis for comparing interest rates

Answer 34

True

Question 35

Time value of money analysis can be used in determining the amount to be deposited annually to accumulate a certain amount in the future

Answer 35

True

Question 36

Time value of money analysis can also be used in loan amortization

Answer 36

True

Question 37

In determining the future value you multiply the amount by the FV factor

Answer 37

True

Question 38

In computing for the present value the amount is divided by the factor

Answer 38

True

Question 39

The future value of 100,000 at the rate of 8% per annum is 116 640 for the second year

Answer 39

True

Question 40

At the end of the future the future value of 100,000 invested at 8% per annum is a little less than 150,000

Answer 40

True

Question 41

Time value of money analysis uses a table of factors when computing using short method

Answer 41

True

Question 42

Cash is valued at face value

Answer 42

True

Question 43

The best system in handling cash is imprest system

Answer 43

True

Question 44

In imprest system of handling cash, all cash received are deposited at the bank, all disbursement in the form of checks except for small expenses which can be paid out of petty cash fund

Answer 44

True

Question 45

Combo account is better than just a saving account as it generates more interest

Answer 45

True

Question 46

Better yet, cash and combo account be transferred as time deposit to earn much more income

Answer 46

True

Question 47

There are risk in not maintaining a change fund under the imprest system of handling cash

Answer 47

True

Question 48

Provisional receipt can also be used by the cashier upon receipt of cash

Answer 48

False

Question 49

The collector can also use official receipt upon receiving cash

Answer 49

False

Question 50

Policies on cash handling can deter misuse of cash

Answer 50

true

Question 51

Establishing good relationship with the banker officers is a key in getting better interest rate in time deposits

Answer 51

True

Question 52

Routine audit to counter check the books and reports is one way of controlling cash

Answer 52

True

Question 53

There is no need to identify the books where cash transactions were recorded

Answer 53

False

Question 54

The preparation of a strategic plan does not help in controlling cash

Answer 54

False

Question 55

Without the in-depth knowledge of the cash environment control will become a matter of trial and error

Answer 55

True

Question 56

To avoid queuing in the bank, e- banking can be used in transacting with the bank

Answer 56

True