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 2 of 12

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Q11.
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.
Q12.
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.
Q13.
What risk factors does the finance manager need to consider in fund procurement decisions for projected investment decisions?

a.

Only high inflations

b.

Only declining consumers' demand

c.

Only fiscal and financial sector imbalances

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The finance manager needs to consider risk factors such as high inflations, declining consumers' demand, fiscal and financial sector imbalances, and other potential risk factors in fund procurement decisions for projected investment decisions.
Q14.
What can slow down the economy growth rate and pull down corporate profitability in financial management?

a.

Abnormal hike in interest rates

b.

Fixed rate of interest

c.

Tax advantage

d.

Low p/e ratios

Discuss
Answer: (a).Abnormal hike in interest rates Explanation:Abnormal hike in interest rates can slow down the economy growth rate and pull down corporate profitability in financial management.
Q15.
How does the finance manager handle abnormal hike in interest rates in financial management?

a.

By increasing corporate profitability

b.

By decreasing the economy growth rate

c.

By considering possible and potential risk factors

d.

By ignoring the risk factors

Discuss
Answer: (c).By considering possible and potential risk factors Explanation:The finance manager handles abnormal hike in interest rates by considering possible and potential risk factors in fund procurement decisions for projected investment decisions.
Q16.
What is the responsibility of the financial manager in allocation of funds decisions?

a.

Identifying situations that require more funds

b.

Ensuring proper use of funds

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The financial manager's responsibility in allocation of funds decisions includes identifying situations that require more funds and ensuring proper use of funds.
Q17.
What is the key objective of the financial manager in using funds effectively?

a.

Generating income equal to cost of capital

b.

Generating income more than cost of capital

c.

Minimizing income

d.

Maximizing income

Discuss
Answer: (b).Generating income more than cost of capital Explanation:The key objective of the financial manager in using funds effectively is to generate income more than the cost of capital at which funds are procured.
Q18.
What specialized knowledge and experience are required for decisions on employment of funds in financial management?

a.

Marketing analysis

b.

Capital budgeting, working capital management, liquidity and solvency management

c.

Human resource management

d.

Sales analysis

Discuss
Answer: (b).Capital budgeting, working capital management, liquidity and solvency management Explanation:Decisions on employment of funds in financial management require specialized knowledge and experience in capital budgeting, working capital management, liquidity and solvency management, investment analysis, and portfolio management.
Q19.
What areas should the financial manager update their knowledge and understanding on in financial management?

a.

Only financial risks analysis

b.

Only relationship between cost of capital and ROI

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The financial manager should update their knowledge and understanding on areas such as financial risks analysis, relationship between cost of capital and ROI, and other relevant financial aspects.
Q20.
How are the decisions taken by the financial manager in Financial Management broadly classified?

a.

Investment decisions, Financing decisions, Dividend Decisions

b.

Marketing decisions, Production decisions, HR decisions

c.

Research decisions, Development decisions, Sales decisions

d.

Asset allocation decisions, Procurement decisions, Control decisions

Discuss
Answer: (a).Investment decisions, Financing decisions, Dividend Decisions Explanation:The decisions taken by the financial manager in Financial Management are broadly classified as Investment decisions, Financing decisions, and Dividend Decisions.
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