Introduction to Financial Management MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Introduction to Financial Management, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Introduction to Financial Management MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Introduction to Financial Management mcq questions that explore various aspects of Introduction to Financial Management problems. Each MCQ is crafted to challenge your understanding of Introduction to Financial Management principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Introduction to Financial Management MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Introduction to Financial Management. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Introduction to Financial Management knowledge to the test? Let's get started with our carefully curated MCQs!

Introduction to Financial Management MCQs | Page 1 of 12

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Q1.
What are the fundamental aspects of managing covered by Financial Management?

a.

Planning, Organizing, Directing, Coordinating, Controlling

b.

Research, Development, Marketing, Sales

c.

Human resource management, budgeting, marketing

d.

Asset management, acquisition, allocation

Discuss
Answer: (a).Planning, Organizing, Directing, Coordinating, Controlling Explanation:Financial Management covers fundamental aspects of managing, including Planning, Organizing, Directing, Coordinating, and Controlling.
Q2.
Which managerial function involves the integrated decision-making process in Financial Management?

a.

Planning

b.

Organizing

c.

Coordinating

d.

Allocating

Discuss
Answer: (a).Planning Explanation:Planning is the managerial function that involves the integrated decision-making process in Financial Management.
Q3.
What does Financial Management undertake in the decision-making process?

a.

Only acquisition of assets

b.

Only financing

c.

Acquisition of assets, financing, and managing

d.

Only managing assets

Discuss
Answer: (c).Acquisition of assets, financing, and managing Explanation:Financial Management undertakes an integrated decision-making process involving acquisition of assets, financing, and managing to accomplish organizational goals and objectives.
Q4.
What factors does the procurement of funds decision in financial management involve?

a.

Only cost of capital

b.

Only sources of funds

c.

Only terms and conditions of repayment

d.

Sources of funds, terms and conditions of repayment, cost of capital, and control

Discuss
Answer: (d).Sources of funds, terms and conditions of repayment, cost of capital, and control Explanation:Procurement of funds decision in financial management involves considering sources of funds, terms and conditions of repayment, cost of capital, and control.
Q5.
Why are equity shares considered the best source of funding from a risk point of view?

a.

They have fixed rate of interest

b.

They are entitled to entire divisible profits

c.

They are less expensive

d.

They have tax advantages

Discuss
Answer: (b).They are entitled to entire divisible profits Explanation:Equity shares are considered the best source of funding from a risk point of view because they are entitled to entire divisible profits.
Q6.
What makes debentures a cheaper source of funds compared to shares?

a.

Fixed rate of interest

b.

Tax advantage

c.

Entitlement to divisible profits

d.

High cost of capital

Discuss
Answer: (b).Tax advantage Explanation:Debentures are a cheaper source of funds compared to shares due to fixed rate of interest and tax advantage.
Q7.
What is the primary focus of Financial Management?

a.

Asset management

b.

Maximizing returns

c.

Human resource management

d.

Marketing strategy

Discuss
Answer: (b).Maximizing returns Explanation:Financial Management is primarily concerned with planning and controlling financial resources to maximize returns for an enterprise.
Q8.
Which of the following is NOT a function of Financial Management?

a.

Acquisition of funds

b.

Raising of capital

c.

Human resource management

d.

Allocation of funds and capital

Discuss
Answer: (c).Human resource management Explanation:Financial Management functions include acquisition of funds, raising of capital, and allocation of funds and capital among different projects to maximize enterprise value.
Q9.
What does Financial Management encompass in terms of managing?

a.

Managing only financial resources

b.

Managing only human resources

c.

Managing only marketing strategies

d.

Managing all fundamental aspects of a business enterprise

Discuss
Answer: (d).Managing all fundamental aspects of a business enterprise Explanation:Financial Management involves Planning, Organising, Directing, Coordinating, Controlling, and Budgeting (PODSCORB) in respect of financial resources and allocation in a business enterprise.
Q10.
In the context of financial management, what does the finance manager need to consider in decisions on procurement of funds?

a.

Only cost

b.

Only control

c.

Only risk

d.

Cost, control, and risk

Discuss
Answer: (d).Cost, control, and risk Explanation:In decisions on procurement of funds, the finance manager needs to consider cost, control, and risk.
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