CPCU 540 COMPLETE EXAMINATION TEST
QUESTIONS WITH VERIFIED SOLUTIONS
●● corporate finance
Answer: the area within the discipline of finance that concerns a
corporation's investing and financing decisions
●● accounting
Answer: focuses on accumulating and reporting financial information to
support decision making
●● responsibilities of a corporate finance dept
Answer: acquiring, investing, and managing the organization's financial
resources, as well as conducting accounting activities
●● goals of corporate finance and accounting
Answer: to maximize shareholder wealth; to provide for transparency in
financial reporting; to conduct financial operations in an ethical manner
●● stakeholder
Answer: anyone with a financial interest in the corporation
●● Sarbanes-Oxley Act of 2002
,Answer: a federal statutory law governing corporate directors in the
areas of investor protection, internal controls, and penalties, both civil
and criminal
●● key corporate finance activities
Answer: working capital management; capital structure management;
capital budgeting; accounting activities
●● working capital management
Answer: focuses on a corporation's short-term needs for cash and other
resources
●● capital structure management
Answer: focuses on raising capital through borrowing or selling stock as
well as the specific financial vehicles that will be used
●● accounting activities
Answer: financial accounting, taxation, financial reporting
●● financial manager
Answer: makes investment and financing decisions for the organization
●● chief financial officer (CFO)
,Answer: a senior executive whose main responsibility is setting the
corporation's overall financial strategy
●● treasurer's responsibilities
Answer: working capital management, capital structure management,
capital budgeting
●● controller's responsibilities
Answer: accounting functions, taxes, and financial reporting
●● working capital
Answer: a liquidity measure that is calculated by subtracting current
liabilities from current assets; used to determine a company's ability to
finance immediate operations (to buy inventory, finance growth, and
obtain credit)
●● current assets
Answer: include cash, accounts receivable from customers, marketable
securities, and inventory
●● current liabilities
Answer: include amounts owed to suppliers and employees, and the
current portion of any loans payable (that is, the amount due within one
year)
, ●● capital structure
Answer: a corporation's mix of long-term debt and equity
●● capital budgeting
Answer: the planning and managing of a corporation's long-term
investments
●● generally accepted accounting principles (GAAP)
Answer: a common set of accounting standards and procedures used in
the preparation of financial statements to ensure consistency of
presentation and reported results
●● going concern concept
Answer: an accounting assumption that a business entity will continue to
operate indefinitely
●● cost principle
Answer: requires an organization's assets to be recorded at their
purchase price or production price
●● revenue recognition principle
Answer: requires revenues to be recognized and recorded at the time
services are rendered or goods are sold to customers
QUESTIONS WITH VERIFIED SOLUTIONS
●● corporate finance
Answer: the area within the discipline of finance that concerns a
corporation's investing and financing decisions
●● accounting
Answer: focuses on accumulating and reporting financial information to
support decision making
●● responsibilities of a corporate finance dept
Answer: acquiring, investing, and managing the organization's financial
resources, as well as conducting accounting activities
●● goals of corporate finance and accounting
Answer: to maximize shareholder wealth; to provide for transparency in
financial reporting; to conduct financial operations in an ethical manner
●● stakeholder
Answer: anyone with a financial interest in the corporation
●● Sarbanes-Oxley Act of 2002
,Answer: a federal statutory law governing corporate directors in the
areas of investor protection, internal controls, and penalties, both civil
and criminal
●● key corporate finance activities
Answer: working capital management; capital structure management;
capital budgeting; accounting activities
●● working capital management
Answer: focuses on a corporation's short-term needs for cash and other
resources
●● capital structure management
Answer: focuses on raising capital through borrowing or selling stock as
well as the specific financial vehicles that will be used
●● accounting activities
Answer: financial accounting, taxation, financial reporting
●● financial manager
Answer: makes investment and financing decisions for the organization
●● chief financial officer (CFO)
,Answer: a senior executive whose main responsibility is setting the
corporation's overall financial strategy
●● treasurer's responsibilities
Answer: working capital management, capital structure management,
capital budgeting
●● controller's responsibilities
Answer: accounting functions, taxes, and financial reporting
●● working capital
Answer: a liquidity measure that is calculated by subtracting current
liabilities from current assets; used to determine a company's ability to
finance immediate operations (to buy inventory, finance growth, and
obtain credit)
●● current assets
Answer: include cash, accounts receivable from customers, marketable
securities, and inventory
●● current liabilities
Answer: include amounts owed to suppliers and employees, and the
current portion of any loans payable (that is, the amount due within one
year)
, ●● capital structure
Answer: a corporation's mix of long-term debt and equity
●● capital budgeting
Answer: the planning and managing of a corporation's long-term
investments
●● generally accepted accounting principles (GAAP)
Answer: a common set of accounting standards and procedures used in
the preparation of financial statements to ensure consistency of
presentation and reported results
●● going concern concept
Answer: an accounting assumption that a business entity will continue to
operate indefinitely
●● cost principle
Answer: requires an organization's assets to be recorded at their
purchase price or production price
●● revenue recognition principle
Answer: requires revenues to be recognized and recorded at the time
services are rendered or goods are sold to customers
