D076 - PA Questions and Answers verified 100%

In which way is accounting different from finance? Accounting is about budgeting, saving, and borrowing, while finance is about investing, forecasting, and lending. Accounting is focused on allocating capital, while finance is focused on bringing in capital. Accounting is backward looking, while finance is focused on the future. Accounting forecasts future performance, given the past, while finance records past performance. Accounting is backward looking, while finance is focused on the future. A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year. Which main task in business finance is this situation an example of? Managing working capital Making investment decisions Making financing decisions Managing interdepartmental loans Making financing decisions What is the main question that both individuals and companies must consider when making financial decisions to reach a goal? Will this decrease the amount of cash available? Will utility be maximized through this decision? Will this decision require debt or equity financing? Will the benefits of the action outweigh the costs? Will the benefits of the action outweigh the costs? How can investing help a person reach personal financial goals? It ensures money is placed in a safe, risk-free, and easily accessible financial asset. It provides a guaranteed future outcome in order to predictably meet financial goals. It helps a person understand how money was spent previously in order to reliably predict future expenses. It provides access to potential revenue or increases in value to help meet goals faster. It provides access to potential revenue or increases in value to help meet goals faster. How does an investment institution, such as a mutual fund, facilitate the circulation of money in the economy? By raising capital on a contractual basis, such as an insurance contract By providing individuals and firms access to financial markets to buy or sell financial securities By insuring deposits in investment accounts up to $250,000 to promote public confidence By accepting deposits of money, paying interest on deposits, and providing loans to individuals and organizations By providing individuals and firms access to financial markets to buy or sell financial securities Which type of economic indicator is used by governments and policymakers to implement or alter policies in an effort to avoid or minimize the effects of an economic downturn? Leading indicator Lagging indicator Correlated indicator Coincident indicator Leading indicator What should a potential bondholder (lender) do to prevent a company (borrower) from taking on risky projects? Separate owners from management so their interests do not conflict Release managers who do not attempt to maximize immediate shareholder value Encourage manipulation of accounting procedures to optimize the company's profit Set strict covenants that the company cannot uphold if it chooses a risky project Set strict covenants that the company cannot uphold if it chooses a risky project