TREASURY MANAGEMENT EXAMINATION QUESTIONS AND CORRECT ANSWER WITH EXPLANATION GRADED A+ STUDY GUIDE

TREASURY MANAGEMENT EXAMINATION QUESTIONS
AND CORRECT ANSWER WITH EXPLANATION GRADED
A+ STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Treasury management refers to:
A. Management of a firm’s cash and financial assets
B. Tax collection
C. Marketing activities
D. Production planning
Answer: A
Rationale: Treasury focuses on liquidity and financial resources.

2. The main objective of treasury management is to:
A. Ensure liquidity and profitability
B. Maximize taxes
C. Reduce sales
D. Increase inventory only
Answer: A
Rationale: Balancing liquidity and returns.

3. Cash management involves:
A. Controlling inflows and outflows of cash
B. Only recording profits
C. Only budgeting
D. Only investing stocks
Answer: A
Rationale: Monitoring cash movements.

4. Liquidity means:
A. Ability to meet short-term obligations
B. Long-term profit
C. Market share
D. Fixed assets
Answer: A
Rationale: Availability of cash.

,5. Working capital is:
A. Current assets minus current liabilities
B. Total assets
C. Long-term debt
D. Net profit
Answer: A
Rationale: Short-term financial position.

6. Positive working capital means:
A. Current assets exceed liabilities
B. Losses exceed profits
C. No cash
D. Debt only
Answer: A
Rationale: Good liquidity position.

7. Negative working capital means:
A. Liabilities exceed assets
B. High profits
C. No debt
D. Excess cash
Answer: A
Rationale: Liquidity risk.

8. Cash flow is:
A. Movement of money in and out of business
B. Profit only
C. Inventory level
D. Sales revenue
Answer: A
Rationale: Actual cash movement.

9. Operating cash flow comes from:
A. Core business activities
B. Loans
C. Investments only
D. Taxes
Answer: A
Rationale: Business operations.

, 10. Financing cash flow relates to:
A. Borrowing and equity transactions
B. Sales only
C. Inventory
D. Production
Answer: A
Rationale: Capital structure activities.

11. Investing cash flow includes:
A. Purchase of assets
B. Salaries only
C. Taxes
D. Revenue
Answer: A
Rationale: Capital expenditure.

12. Cash budget is used to:
A. Forecast cash needs
B. Calculate taxes
C. Set prices
D. Hire staff
Answer: A
Rationale: Liquidity planning.

13. Cash surplus means:
A. Excess cash available
B. Cash shortage
C. Debt increase
D. Loss
Answer: A
Rationale: Extra liquidity.

14. Cash deficit means:
A. Insufficient cash
B. Excess cash
C. Profit increase
D. No expenses
Answer: A
Rationale: Liquidity shortage.