BUSINESS 101 FINAL EXAM LATEST
UPDATED QUESTIONS WITH VERIFIED
ACTUAL ANSWERS. (UNIVERSITY OF TAMPA
(CH. 10-13)
Individuals prefer more certain financial earnings than less certain outcomes. Therefore, investors and
lenders usually demand higher earnings or a higher interest rate to be compensated for incurring
additional risk. - answer ✔✔-risk-return trade-off
individuals usually prefer to have good things sooner and prefer to put off bad things until later. -
answer ✔✔-time value of money
financial managers recognize that "cash pays the bills, not profits." - answer ✔✔-cash flow not profits
the value of an asset in an organization is its ability to generate positive cash flow over time. - answer
✔✔-valuation of assets
can moderate risk: the probability of one thing going wrong on any one day is higher than the
probability of everything going wrong on that day. - answer ✔✔-diversification
in large and medium-sized companies, the responsibilities of financial manager fall to these people. The
CFO is a senior position within the organizational structure that usually reports directly to the CEO. -
answer ✔✔-chief financial officer (CFO) / vice president of finance
(the first step of the financial planning process) - to generate a prediction of the upcoming financial
needs of the firm. - answer ✔✔-forecasts
a prediction of the amount of money that is expected to be coming into the company and the amount of
money that the company expects to have to pay out. - answer ✔✔-cash flow forecast
, based on expectations of net cash flows within the next 12 months. - answer ✔✔-short-term cash flow
forecasts
based on expectations of net cash flows for one year or more. - answer ✔✔-long-term cash flow
forecasts
used by firms as a roadmap to guide the activities of the firm. shows how the firm plans to allocate its
financial assets to achieve the forecasted goals and objectives. - answer ✔✔-budgets
are focused on the expected revenue and expenses related to the firm's predicted sales forecast. -
answer ✔✔-operating budgets
aid in decisions related to the purchase of long-term assets that usually involve high-dollar expenditures.
- answer ✔✔-capital budgets
show cash flow surpluses and shortfalls over shorter time periods such as one to three months into the
future based on the current planned operating and financing activities of the firm. - answer ✔✔-cash
flow budgets
bring all of the information from the other budgets together and serve as a master financial plan for the
firm over a given planning horizon. - answer ✔✔-master budgets
established by financial managers to compare how the firm is performing relative to the budget plan. -
answer ✔✔-controls
the funds that firms use to meet their day to day operational cash flow needs. - answer ✔✔-working
capital
when a seller allows the purchaser to pay for the product at some point in the near future yet take
delivery of the product or service immediately. - answer ✔✔-trade credit
UPDATED QUESTIONS WITH VERIFIED
ACTUAL ANSWERS. (UNIVERSITY OF TAMPA
(CH. 10-13)
Individuals prefer more certain financial earnings than less certain outcomes. Therefore, investors and
lenders usually demand higher earnings or a higher interest rate to be compensated for incurring
additional risk. - answer ✔✔-risk-return trade-off
individuals usually prefer to have good things sooner and prefer to put off bad things until later. -
answer ✔✔-time value of money
financial managers recognize that "cash pays the bills, not profits." - answer ✔✔-cash flow not profits
the value of an asset in an organization is its ability to generate positive cash flow over time. - answer
✔✔-valuation of assets
can moderate risk: the probability of one thing going wrong on any one day is higher than the
probability of everything going wrong on that day. - answer ✔✔-diversification
in large and medium-sized companies, the responsibilities of financial manager fall to these people. The
CFO is a senior position within the organizational structure that usually reports directly to the CEO. -
answer ✔✔-chief financial officer (CFO) / vice president of finance
(the first step of the financial planning process) - to generate a prediction of the upcoming financial
needs of the firm. - answer ✔✔-forecasts
a prediction of the amount of money that is expected to be coming into the company and the amount of
money that the company expects to have to pay out. - answer ✔✔-cash flow forecast
, based on expectations of net cash flows within the next 12 months. - answer ✔✔-short-term cash flow
forecasts
based on expectations of net cash flows for one year or more. - answer ✔✔-long-term cash flow
forecasts
used by firms as a roadmap to guide the activities of the firm. shows how the firm plans to allocate its
financial assets to achieve the forecasted goals and objectives. - answer ✔✔-budgets
are focused on the expected revenue and expenses related to the firm's predicted sales forecast. -
answer ✔✔-operating budgets
aid in decisions related to the purchase of long-term assets that usually involve high-dollar expenditures.
- answer ✔✔-capital budgets
show cash flow surpluses and shortfalls over shorter time periods such as one to three months into the
future based on the current planned operating and financing activities of the firm. - answer ✔✔-cash
flow budgets
bring all of the information from the other budgets together and serve as a master financial plan for the
firm over a given planning horizon. - answer ✔✔-master budgets
established by financial managers to compare how the firm is performing relative to the budget plan. -
answer ✔✔-controls
the funds that firms use to meet their day to day operational cash flow needs. - answer ✔✔-working
capital
when a seller allows the purchaser to pay for the product at some point in the near future yet take
delivery of the product or service immediately. - answer ✔✔-trade credit
