LSUS MBA 702 – FINANCIAL MANAGEMENT, MODULE 1
EXAMINATION COMPLETE QUESTIONS AND DETAILED
SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED
1. Which statement best describes the primary role of financial management
within a business organization?
A. Designing employee training programs
B. Managing financial resources to support organizational objectives
C. Developing advertising campaigns
D. Supervising manufacturing quality
Answer: B
Rationale: Financial management focuses on acquiring, allocating, and controlling
financial resources to support organizational objectives and create value.
2. Which financial decision involves determining what long-term assets a
company should purchase?
A. Working capital decision
B. Capital budgeting decision
C. Dividend decision
D. Credit collection decision
Answer: B
,Rationale: Capital budgeting evaluates long-term investments such as facilities,
equipment, technology, and other productive assets.
3. Which decision specifically concerns how a company finances its long-term
investments?
A. Capital structure decision
B. Inventory decision
C. Marketing decision
D. Revenue recognition decision
Answer: A
Rationale: Capital structure decisions determine the appropriate combination of
debt and equity used to finance business operations and investments.
4. Which activity is most directly associated with working capital management?
A. Selecting a new chief executive officer
B. Managing accounts receivable and accounts payable
C. Determining long-term corporate strategy
D. Issuing common stock exclusively
Answer: B
Rationale: Working capital management involves short-term assets and liabilities,
including cash, inventory, receivables, and payables.
,5. Which executive is generally the highest-ranking financial manager in a
corporation?
A. Chief Operating Officer
B. Chief Marketing Officer
C. Chief Financial Officer
D. Human Resources Director
Answer: C
Rationale: The chief financial officer oversees major financial activities and
coordinates financial planning, reporting, and strategic financial decisions.
6. Which financial management activity would typically involve deciding
whether to borrow money or issue stock?
A. Capital structure management
B. Inventory management
C. Revenue forecasting
D. Production scheduling
Answer: A
Rationale: Capital structure concerns the mix of debt and equity financing used to
fund company activities.
7. Which financial statement reports a company's assets, liabilities, and equity
at a specific point in time?
, A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Rationale: The balance sheet presents the company's financial position by
reporting assets, liabilities, and owners' equity at a particular date.
8. Which accounting equation must always remain balanced?
A. Revenue = Expenses + Equity
B. Assets = Liabilities + Equity
C. Assets = Revenue − Expenses
D. Equity = Assets + Liabilities
Answer: B
Rationale: The fundamental accounting equation states that total assets must
equal total liabilities plus shareholders' equity.
9. A company has assets of $900,000 and liabilities of $350,000. What is its
owners' equity?
A. $450,000
B. $500,000
C. $550,000
D. $1,250,000
EXAMINATION COMPLETE QUESTIONS AND DETAILED
SOLUTIONS LATEST UPDATE THIS YEAR JUST RELEASED
1. Which statement best describes the primary role of financial management
within a business organization?
A. Designing employee training programs
B. Managing financial resources to support organizational objectives
C. Developing advertising campaigns
D. Supervising manufacturing quality
Answer: B
Rationale: Financial management focuses on acquiring, allocating, and controlling
financial resources to support organizational objectives and create value.
2. Which financial decision involves determining what long-term assets a
company should purchase?
A. Working capital decision
B. Capital budgeting decision
C. Dividend decision
D. Credit collection decision
Answer: B
,Rationale: Capital budgeting evaluates long-term investments such as facilities,
equipment, technology, and other productive assets.
3. Which decision specifically concerns how a company finances its long-term
investments?
A. Capital structure decision
B. Inventory decision
C. Marketing decision
D. Revenue recognition decision
Answer: A
Rationale: Capital structure decisions determine the appropriate combination of
debt and equity used to finance business operations and investments.
4. Which activity is most directly associated with working capital management?
A. Selecting a new chief executive officer
B. Managing accounts receivable and accounts payable
C. Determining long-term corporate strategy
D. Issuing common stock exclusively
Answer: B
Rationale: Working capital management involves short-term assets and liabilities,
including cash, inventory, receivables, and payables.
,5. Which executive is generally the highest-ranking financial manager in a
corporation?
A. Chief Operating Officer
B. Chief Marketing Officer
C. Chief Financial Officer
D. Human Resources Director
Answer: C
Rationale: The chief financial officer oversees major financial activities and
coordinates financial planning, reporting, and strategic financial decisions.
6. Which financial management activity would typically involve deciding
whether to borrow money or issue stock?
A. Capital structure management
B. Inventory management
C. Revenue forecasting
D. Production scheduling
Answer: A
Rationale: Capital structure concerns the mix of debt and equity financing used to
fund company activities.
7. Which financial statement reports a company's assets, liabilities, and equity
at a specific point in time?
, A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Rationale: The balance sheet presents the company's financial position by
reporting assets, liabilities, and owners' equity at a particular date.
8. Which accounting equation must always remain balanced?
A. Revenue = Expenses + Equity
B. Assets = Liabilities + Equity
C. Assets = Revenue − Expenses
D. Equity = Assets + Liabilities
Answer: B
Rationale: The fundamental accounting equation states that total assets must
equal total liabilities plus shareholders' equity.
9. A company has assets of $900,000 and liabilities of $350,000. What is its
owners' equity?
A. $450,000
B. $500,000
C. $550,000
D. $1,250,000
