Test Bank for Finance for Non-Financial Managers 7th Canadian Edition (January 1, 2013) by Pierre Bergeron, ISBN No; 9780176530839, all
12 Chapters Covered
Page | 1
STUDYGUIDESOLUTIONS
, Test Bank for Finance for Non-Financial Managers 7th Canadian Edition (January 1, 2013) by Pierre Bergeron, ISBN No; 9780176530839, all 12 Chapters Covered
NETA ASSESSMENT
Test Bank
to accompany
Page | 2
Seventh Edition prepared by
Jake Chazan
Seneca College
STUDYGUIDESOLUTIONS
,NETA Assessment: Test Bank to accompany Finance for Non-FinancialManagers, Seventh Edition
By Pierre Bergeron
Test Bank prepared by Jake Chazan NETA copy
editors: Mariko Obokata
Andrea Douglas
Available on Resource CD ISBN 0176652922 and at www.bergeron7e.nelson.com
COPYRIGHT © 2014 by Nelson Education Ltd. Nelson is a registered trademark used herein under licence. Allrights reserved.
For more information contact Nelson, 1120 Birchmount Road, Toronto, Ontario M1K 5G4. Or you can visit ourInternet site at www.nelson.com.
ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used inany form or by any means graphic,
electronic, or mechanical, including photocopying, recording, taping, web distribution or information storage and retrieval systems without the
written permission of the publisher
ii
, CONTENTS
Preface..................................................................................................................................................................................................................................................... iv
CHAPTER 1 Overview of Financial Management ............................................................................................................................................. 1-1
CHAPTER 2 Accounting and Financial Statements .......................................................................................................................................... 2-1
CHAPTER 3 Statement of Cash Flows ................................................................................................................................................................. 3-1
CHAPTER 4 Financial Statement Analysis......................................................................................................................................................... 4-1
CHAPTER 5 Profit Planning and Decision Making ........................................................................................................................................... 5-1
CHAPTER 6 Working Capital Management ...................................................................................................................................................... 6-1
CHAPTER 7 Planning, Budgeting, and Controlling........................................................................................................................................... 7-1
CHAPTER 8 Sources and Forms of Financing .................................................................................................................................................... 8-1
CHAPTER 9 Cost of Capital, Capital Structure, and Financial Markets ........................................................................................................ 9-1
CHAPTER 10 Time-Value-of-Money Concept ................................................................................................................................................... 10-1
CHAPTER 11 Capital Budgeting .......................................................................................................................................................................... 11-1
CHAPTER 12 Business Valuation ........................................................................................................................................................................ 12-1
iii
, PREFACE
In most post-secondary courses, a large percentage of student assessment is based on multiple-choice testing. Many instructors use multiple-choice
reluctantly, believing that it is a methodology best used for testing what a student remembers rather than what she or he has learned.
Nelson Education Ltd. understands that a good quality multiple-choice test bank can provide the means to measure higher-level thinking skills as well
as recall. Recognizing the importance of multiple- NETA the Nelson Education Teaching
Advantage program to ensure the value of our high quality testbanks.
The NETA program was created in partnership with David DiBattista, a 3M National TeachingFellow, professor of psychology at Brock University, and
researcher in the area of multiple- choice testing. NETA ensures that subject-matter experts who author test banks have had training in two areas: avoiding
common errors in test construction, and developing multiple- choice test questions that to assess higher-level thinking.
All NETA test banks include David for instructors, Choice Tests:
designed to assist you in using Nelson test banks to achieve your desired outcomes in your course.
Finance for Non-financial Managers, Seventh Edition, has been revised for students by Jake Chazan. The
multiple-choice questions were written and edited to conform to NETA guidelines, which emphasize the development of higher-order thinking and the
effective construction of questions. NETA principles of questionconstruction help eliminate ambiguity, arguable answers, guesswork, and unconscious
cues to test-savvy students, resulting in a test that accurately reflects student understanding. The Test Bank offers 2317 questions, including about 599
multiple choice, 516 true/false, 380 problems, 362 completion, and about 460 matching item questions, and about 390 problems.
In addition to providing a variety of questions related to each chapter objective, this test bankalso employs a series of tags that can help design effective,
balanced tests by the measure of course outcomes. All of the tags are included with the question in the test bank. These tags include:
• ANS: The correct answer. (Suggested answers are provided for the essay questions.)
• PTS: The number of points an instructor can assign for each question. The default is 1point.
iv
,• This category is included to assist instructors in assessing
higher-order cognitiveskills.
• OBJ: The related learning objective (or objectives) in the text.
• REF: The related page number in the text.
The Computerized Test Bank
All items from this Test Bank are also available in ExamView®, a computerized testing package with online capabilities. ExamView® helps you create,
customize and deliver both -to-usetest wizard guide you step-
by-step through the test creation process. The ExamView® Test
and Macintosh platforms (ISBN 0176652922).
v
,Chapter 1 Overview of Financial Management
MULTIPLE CHOICE
1. Which of the following statements describes an activity which is financial management?
a. Looking after trade payables and corporate accounting is not a responsibility of thecontroller.
b. Monitoring the profit for the year which is the difference between revenue and
gross profit.
c. The treasurer raising funds.
d. Ensuring that the cost of borrowing is greater than the return on assets.
ANS: C PTS: 1 REF: 11 OBJ: LO 2
BLM: Higher Order
2. Which of the following statements describes a financial management activity?
a. Arranging internal financing is obtained from banks and investors.
b. Ensuring liquidity by managing the payment of dividends.
c. Operating decisions dealing with better utilization of non-current assets.
d. The stability objective is related to the financial structure of a business.
ANS: D PTS: 1 REF: 15 OBJ: LO 4
BLM: Remember
3. Which of the following activities is NOT a financial management function?
a. The treasurer is responsible for corporate accounting.
b. External financing is obtained from investors.
c. Internal financing is obtained from retained earnings anddepreciation/amortization.
d. Improving net profit through the use of productivity indicators and planned
downsizing.
ANS: A PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
4. What is the ultimate objective of financial management?
a. to ensure the ROA is higher than ROR
b. to obtain a higher ROR than ROA
c. to ensure that ROA is higher than the cost of financing
d. to collect trade receivables faster than the payment of trade and other payables
ANS: C PTS: 1 REF: 7 OBJ: LO 2
BLM: Remember
1-1
STUDYGUIDESOLUTIONS
, Chapter 1 Overview of Financial Management
5. Which activity is the controller responsible for?
a. general accounting
b. tax administration
c. investor relations
d. analyzing short- and long-term borrowing sources
ANS: A PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
6. What is considered an "efficiency" financial objective?
a. the ability to meet short-term financial commitments
b. the ability minimize the cost of borrowed funds
c. the return on trade receivables
d. the return on revenue
ANS: D PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
7. What does the profit for the year pay for?
a. executive bonuses
b. interest on debt
c. dividends
d. employee salaries
ANS: C PTS: 1 REF: 17 OBJ: LO 5
BLM: Remember
8. Which of the following is a source of internal financing?
a. revenue
b. depreciation/amortization
c. mortgages
d. long-term borrowings
ANS: B PTS: 1 REF: 16 OBJ: LO 5
BLM: Remember
9. What do investing decisions deal with?
a. the cost of borrowed funds
b. planned downsizing
c. buying non-current assets
d. the financing mix
ANS: C PTS: 1 REF: 19 OBJ: LO 5
BLM: Remember
STUDYGUIDESOLUTIONS 1-2
, Chapter 1 Overview of Financial Management
10. What type of decision is the management of working capital?
a. an operating decision
b. an investing decision
c. a financing decision
d. a capital budgeting decision
ANS: A PTS: 1 REF: 23 OBJ: LO 5
BLM: Remember
11. How is gross profit determined?
a. by deducting the cost of sales from revenue
b. by deducting operating expenses from revenue
c. by deducting income tax expense from profit before taxes
d. by deducting distribution costs from operating profit
ANS: A PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
12. How is ROR calculated?
a. by dividing income before taxes by revenue
b. by dividing cost of sales by revenue
c. by dividing revenue by cost of sales
d. by dividing profit for the year by revenue
ANS: D PTS: 1 REF: 14 OBJ: LO 4
BLM: Higher Order
13. Under which of these circumstances is a company a good investment?
a. A company is a good investment when the ROR is less than the cost of financing.
b. A company is a good investment when the ROA is greater than the cost offinancing.
c. A company is a good investment when the ROA is less than the cost of capital.
d. A company is a good investment when the ROR is greater than the cost offinancing.
ANS: B PTS: 1 REF: 14 OBJ: LO 4
BLM: Higher Order
14. What term is defined as "the activity involved in raising funds and buying assets in order toobtain the highest possible
a. accounting
b. marketing management
c. general management
d. financial management
ANS: D PTS: 1 REF: 7 OBJ: LO 2
BLM: Remember
STUDYGUIDESOLUTIONS 1-3
, Chapter 1 Overview of Financial Management
15. Why is it important for managers to ask, "How are we doing?"
a. It is required by their employment contract.
b. Investors want to know about a financial performance.
c. Interest groups have illegitimate and corresponding objectives.
d. Government agencies want to know about a performance.
ANS: B PTS: 1 REF: 8 OBJ: LO 3
BLM: Remember
16. Who is responsible for credit and collection in a company?
a. the bookkeeper
b. the controller
c. the accountant
d. the treasurer
ANS: B PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
17. What term refers to the relationship between assets and profit for the year?
a. stability
b. efficiency
c. liquidity
d. prosperity
ANS: B PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
18. What does ROA measure?
a. efficiency
b. liquidity
c. fluency
d. prosperity
ANS: A PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
19. What type of decision is made when a company decides whether to arrange a mortgage, sellbonds, or issue shares?
a. a financing decision using internal financing
b. an operating decision using internal financing
c. a financing decision using external financing
d. an operating decision using external financing
ANS: C PTS: 1 REF: 20 OBJ: LO 5
BLM: Remember
STUDYGUIDESOLUTIONS 1-4
12 Chapters Covered
Page | 1
STUDYGUIDESOLUTIONS
, Test Bank for Finance for Non-Financial Managers 7th Canadian Edition (January 1, 2013) by Pierre Bergeron, ISBN No; 9780176530839, all 12 Chapters Covered
NETA ASSESSMENT
Test Bank
to accompany
Page | 2
Seventh Edition prepared by
Jake Chazan
Seneca College
STUDYGUIDESOLUTIONS
,NETA Assessment: Test Bank to accompany Finance for Non-FinancialManagers, Seventh Edition
By Pierre Bergeron
Test Bank prepared by Jake Chazan NETA copy
editors: Mariko Obokata
Andrea Douglas
Available on Resource CD ISBN 0176652922 and at www.bergeron7e.nelson.com
COPYRIGHT © 2014 by Nelson Education Ltd. Nelson is a registered trademark used herein under licence. Allrights reserved.
For more information contact Nelson, 1120 Birchmount Road, Toronto, Ontario M1K 5G4. Or you can visit ourInternet site at www.nelson.com.
ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used inany form or by any means graphic,
electronic, or mechanical, including photocopying, recording, taping, web distribution or information storage and retrieval systems without the
written permission of the publisher
ii
, CONTENTS
Preface..................................................................................................................................................................................................................................................... iv
CHAPTER 1 Overview of Financial Management ............................................................................................................................................. 1-1
CHAPTER 2 Accounting and Financial Statements .......................................................................................................................................... 2-1
CHAPTER 3 Statement of Cash Flows ................................................................................................................................................................. 3-1
CHAPTER 4 Financial Statement Analysis......................................................................................................................................................... 4-1
CHAPTER 5 Profit Planning and Decision Making ........................................................................................................................................... 5-1
CHAPTER 6 Working Capital Management ...................................................................................................................................................... 6-1
CHAPTER 7 Planning, Budgeting, and Controlling........................................................................................................................................... 7-1
CHAPTER 8 Sources and Forms of Financing .................................................................................................................................................... 8-1
CHAPTER 9 Cost of Capital, Capital Structure, and Financial Markets ........................................................................................................ 9-1
CHAPTER 10 Time-Value-of-Money Concept ................................................................................................................................................... 10-1
CHAPTER 11 Capital Budgeting .......................................................................................................................................................................... 11-1
CHAPTER 12 Business Valuation ........................................................................................................................................................................ 12-1
iii
, PREFACE
In most post-secondary courses, a large percentage of student assessment is based on multiple-choice testing. Many instructors use multiple-choice
reluctantly, believing that it is a methodology best used for testing what a student remembers rather than what she or he has learned.
Nelson Education Ltd. understands that a good quality multiple-choice test bank can provide the means to measure higher-level thinking skills as well
as recall. Recognizing the importance of multiple- NETA the Nelson Education Teaching
Advantage program to ensure the value of our high quality testbanks.
The NETA program was created in partnership with David DiBattista, a 3M National TeachingFellow, professor of psychology at Brock University, and
researcher in the area of multiple- choice testing. NETA ensures that subject-matter experts who author test banks have had training in two areas: avoiding
common errors in test construction, and developing multiple- choice test questions that to assess higher-level thinking.
All NETA test banks include David for instructors, Choice Tests:
designed to assist you in using Nelson test banks to achieve your desired outcomes in your course.
Finance for Non-financial Managers, Seventh Edition, has been revised for students by Jake Chazan. The
multiple-choice questions were written and edited to conform to NETA guidelines, which emphasize the development of higher-order thinking and the
effective construction of questions. NETA principles of questionconstruction help eliminate ambiguity, arguable answers, guesswork, and unconscious
cues to test-savvy students, resulting in a test that accurately reflects student understanding. The Test Bank offers 2317 questions, including about 599
multiple choice, 516 true/false, 380 problems, 362 completion, and about 460 matching item questions, and about 390 problems.
In addition to providing a variety of questions related to each chapter objective, this test bankalso employs a series of tags that can help design effective,
balanced tests by the measure of course outcomes. All of the tags are included with the question in the test bank. These tags include:
• ANS: The correct answer. (Suggested answers are provided for the essay questions.)
• PTS: The number of points an instructor can assign for each question. The default is 1point.
iv
,• This category is included to assist instructors in assessing
higher-order cognitiveskills.
• OBJ: The related learning objective (or objectives) in the text.
• REF: The related page number in the text.
The Computerized Test Bank
All items from this Test Bank are also available in ExamView®, a computerized testing package with online capabilities. ExamView® helps you create,
customize and deliver both -to-usetest wizard guide you step-
by-step through the test creation process. The ExamView® Test
and Macintosh platforms (ISBN 0176652922).
v
,Chapter 1 Overview of Financial Management
MULTIPLE CHOICE
1. Which of the following statements describes an activity which is financial management?
a. Looking after trade payables and corporate accounting is not a responsibility of thecontroller.
b. Monitoring the profit for the year which is the difference between revenue and
gross profit.
c. The treasurer raising funds.
d. Ensuring that the cost of borrowing is greater than the return on assets.
ANS: C PTS: 1 REF: 11 OBJ: LO 2
BLM: Higher Order
2. Which of the following statements describes a financial management activity?
a. Arranging internal financing is obtained from banks and investors.
b. Ensuring liquidity by managing the payment of dividends.
c. Operating decisions dealing with better utilization of non-current assets.
d. The stability objective is related to the financial structure of a business.
ANS: D PTS: 1 REF: 15 OBJ: LO 4
BLM: Remember
3. Which of the following activities is NOT a financial management function?
a. The treasurer is responsible for corporate accounting.
b. External financing is obtained from investors.
c. Internal financing is obtained from retained earnings anddepreciation/amortization.
d. Improving net profit through the use of productivity indicators and planned
downsizing.
ANS: A PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
4. What is the ultimate objective of financial management?
a. to ensure the ROA is higher than ROR
b. to obtain a higher ROR than ROA
c. to ensure that ROA is higher than the cost of financing
d. to collect trade receivables faster than the payment of trade and other payables
ANS: C PTS: 1 REF: 7 OBJ: LO 2
BLM: Remember
1-1
STUDYGUIDESOLUTIONS
, Chapter 1 Overview of Financial Management
5. Which activity is the controller responsible for?
a. general accounting
b. tax administration
c. investor relations
d. analyzing short- and long-term borrowing sources
ANS: A PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
6. What is considered an "efficiency" financial objective?
a. the ability to meet short-term financial commitments
b. the ability minimize the cost of borrowed funds
c. the return on trade receivables
d. the return on revenue
ANS: D PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
7. What does the profit for the year pay for?
a. executive bonuses
b. interest on debt
c. dividends
d. employee salaries
ANS: C PTS: 1 REF: 17 OBJ: LO 5
BLM: Remember
8. Which of the following is a source of internal financing?
a. revenue
b. depreciation/amortization
c. mortgages
d. long-term borrowings
ANS: B PTS: 1 REF: 16 OBJ: LO 5
BLM: Remember
9. What do investing decisions deal with?
a. the cost of borrowed funds
b. planned downsizing
c. buying non-current assets
d. the financing mix
ANS: C PTS: 1 REF: 19 OBJ: LO 5
BLM: Remember
STUDYGUIDESOLUTIONS 1-2
, Chapter 1 Overview of Financial Management
10. What type of decision is the management of working capital?
a. an operating decision
b. an investing decision
c. a financing decision
d. a capital budgeting decision
ANS: A PTS: 1 REF: 23 OBJ: LO 5
BLM: Remember
11. How is gross profit determined?
a. by deducting the cost of sales from revenue
b. by deducting operating expenses from revenue
c. by deducting income tax expense from profit before taxes
d. by deducting distribution costs from operating profit
ANS: A PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
12. How is ROR calculated?
a. by dividing income before taxes by revenue
b. by dividing cost of sales by revenue
c. by dividing revenue by cost of sales
d. by dividing profit for the year by revenue
ANS: D PTS: 1 REF: 14 OBJ: LO 4
BLM: Higher Order
13. Under which of these circumstances is a company a good investment?
a. A company is a good investment when the ROR is less than the cost of financing.
b. A company is a good investment when the ROA is greater than the cost offinancing.
c. A company is a good investment when the ROA is less than the cost of capital.
d. A company is a good investment when the ROR is greater than the cost offinancing.
ANS: B PTS: 1 REF: 14 OBJ: LO 4
BLM: Higher Order
14. What term is defined as "the activity involved in raising funds and buying assets in order toobtain the highest possible
a. accounting
b. marketing management
c. general management
d. financial management
ANS: D PTS: 1 REF: 7 OBJ: LO 2
BLM: Remember
STUDYGUIDESOLUTIONS 1-3
, Chapter 1 Overview of Financial Management
15. Why is it important for managers to ask, "How are we doing?"
a. It is required by their employment contract.
b. Investors want to know about a financial performance.
c. Interest groups have illegitimate and corresponding objectives.
d. Government agencies want to know about a performance.
ANS: B PTS: 1 REF: 8 OBJ: LO 3
BLM: Remember
16. Who is responsible for credit and collection in a company?
a. the bookkeeper
b. the controller
c. the accountant
d. the treasurer
ANS: B PTS: 1 REF: 11 OBJ: LO 3
BLM: Remember
17. What term refers to the relationship between assets and profit for the year?
a. stability
b. efficiency
c. liquidity
d. prosperity
ANS: B PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
18. What does ROA measure?
a. efficiency
b. liquidity
c. fluency
d. prosperity
ANS: A PTS: 1 REF: 13 OBJ: LO 4
BLM: Remember
19. What type of decision is made when a company decides whether to arrange a mortgage, sellbonds, or issue shares?
a. a financing decision using internal financing
b. an operating decision using internal financing
c. a financing decision using external financing
d. an operating decision using external financing
ANS: C PTS: 1 REF: 20 OBJ: LO 5
BLM: Remember
STUDYGUIDESOLUTIONS 1-4
