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!

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Introduction to Financial Management MCQs | Page 10 of 12

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Q91.
What constitutes the core of treasury management?

a.

External Reporting

b.

Financial Risk Management

c.

Acquisition and allocation of funds or financial resources

d.

Budgeting and Budgetary Control

Discuss
Answer: (c).Acquisition and allocation of funds or financial resources Explanation:Acquisition and allocation of funds or financial resources constitute the core of treasury management.
Q92.
What is the objective of treasury management?

a.

To achieve financial and management accounting

b.

To optimize risk and return with care for risk-cost trade-offs

c.

To carry out external reporting

d.

To assist corporate management in tax planning

Discuss
Answer: (b).To optimize risk and return with care for risk-cost trade-offs Explanation:The objective of treasury management is to optimize risk and return with care for risk-cost trade-offs.
Q93.
What must the finance manager have to achieve the objective of optimizing risk and return?

a.

Only knowledge in the subject of financial management

b.

Adequate knowledge in the subject of financial management

c.

Only experience in financial management

d.

Adequate experience in the subject of financial management

Discuss
Answer: (b).Adequate knowledge in the subject of financial management Explanation:To achieve the objective of optimizing risk and return, the finance manager must have adequate knowledge in the subject of financial management.
Q94.
What does the finance function assist the corporate management in?

a.

Only External Reporting

b.

Only Tax Planning

c.

Formulation of strategic goals and attaining the goals through executing treasury and control functions of financial management

d.

Both External Reporting and Tax Planning

Discuss
Answer: (c).Formulation of strategic goals and attaining the goals through executing treasury and control functions of financial management Explanation:The finance function assists the corporate management in the formulation of strategic goals and attaining the goals through executing treasury and control functions of financial management.
Q95.
What is the primary focus of financial management?

a.

Managing financial records

b.

Controlling financial resources

c.

Keeping records of financial transactions

d.

Maximizing returns for the enterprise

Discuss
Answer: (d).Maximizing returns for the enterprise Explanation:Financial management is primarily concerned with planning and controlling financial resources of an enterprise with a view to maximize returns.
Q96.
Why is procurement of funds decision considered critical?

a.

Because it involves budgeting

b.

Because it requires the consideration of various factors such as sources of funds, terms and conditions of repayment, cost of capital, and control

c.

Because it is based on Cash Flow analysis

d.

Because it is the only part of financial management

Discuss
Answer: (b).Because it requires the consideration of various factors such as sources of funds, terms and conditions of repayment, cost of capital, and control Explanation:Procurement of funds decision is considered critical as it requires consideration of various factors such as sources of funds, terms and conditions of repayment, cost of capital, and control.
Q97.
What is the responsibility of the financial manager in the allocation of fund decisions?

a.

To maximize returns for the enterprise

b.

To identify situations requiring more funds and ensure effective use of funds to generate income greater than the cost of capital

c.

To maintain financial records

d.

To prepare financial statements

Discuss
Answer: (b).To identify situations requiring more funds and ensure effective use of funds to generate income greater than the cost of capital Explanation:The financial manager is responsible for effective use of funds in such a manner that all funds generate income more than the cost of capital at which funds are procured.
Q98.
How does financial accounting differ from financial management in terms of focus?

a.

Financial accounting focuses on risk analysis, while financial management focuses on risk and return analysis.

b.

Financial accounting focuses on keeping records, while financial management focuses on financial statements analysis, risk and return analysis, business proposal, and capital budgeting.

c.

Financial accounting focuses on capital budgeting, while financial management focuses on risk management.

d.

Financial accounting focuses on financial statements analysis, while financial management focuses on internal control.

Discuss
Answer: (b).Financial accounting focuses on keeping records, while financial management focuses on financial statements analysis, risk and return analysis, business proposal, and capital budgeting. Explanation:Financial accounting is mainly concerned with keeping records, while financial management focuses on financial statements analysis, risk and return analysis, business proposal, and capital budgeting.
Q99.
What is the basis of financial accounting?

a.

Cash Flow principle

b.

Fund Flow principle

c.

Accrual analysis

d.

Budgeting

Discuss
Answer: (c).Accrual analysis Explanation:Financial accounting is based on accrual analysis.
Q100.
What does financial management primarily involve?

a.

Organizing and directing

b.

Acquisition and allocation of funds

c.

Budgeting and control

d.

Financial statements analysis

Discuss
Answer: (b).Acquisition and allocation of funds Explanation:Financial management functions comprise acquisition of funds, raising of capital, allocation of funds and capital among different projects and plans with a view to maximize the value of the enterprise.
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