FINANCIAL MANAGEMENT I

SATURDAYS 7:30-10:30/11:30-2:30
PROF. MARIA CIELO M. LAMPA
QUIZ 2
__________1. If a financial manager has a problem in identifying unethical
behavior or resolving an ethical conflict, the first action (s) he should normally
take is to
a. Consult the Board of Directors.
b. Discuss the problem with his/her immediate superior.
c. Notify the appropriate law enforcement agency.
d. Resign from the company.
_________2. Ellaine is a financial manager who has discovered that her company is
violating environmental regulations. If her immediate supervisor is involved, her
appropriate action is to
a. Do nothing since she has a duty of loyalty to the organization.
b. Consult the audit committee.
c. Present the matter to the next higher managerial level.
d. Confront her immediate superior.
_________3. The key difference between strategic goals and tactical goals is that
tactical goals are
a. Usually attainable.
b. Developed by top management.
c. Concerned with issues other than profit.
d. Short-term in nature.
________4. The treasury function is usually not concerned with
a. Financial reporting.
b. Short-term financing.
c. Cash custody and banking.
d. Credit extension and collection of bad debts.
________5. Controllers are ordinarily not concerned with
a. Preparation of tax returns.
b. Reporting to government.
c. Protection of assets
d. Investor relations
________6. A system by which a company is directed and controlled is called
a. Corporate governance
b. Feedback

c. ethics
d. Risk management
_______7. The delegation of decision-making authority throughout an organization by
providing managers with authority to make decisions relating to their area of
responsibility.
a. Directing and motivating
b. Decentralization
c. Centralized management
d. Planning and control
______8. Mary Walker decided to leave her former job where she earned 500 per day
to go to a new job where she will earn 850 per day. In the decision process, the
former wage of 500 per day would be classified as a (an):
a. Sunk cost
b. Direct cost
c. Fixed cost
d. Opportunity cost
______9. Alberto Santos is an accountant in the Accounting Department of Montero
Sports, Inc.. He has just discovered evidence that some of the corporations sales
managers have been wrongly inflating their expense reports in order to obtain higher
reimbursements from the company. According to ethical standards and code of
professional ethics for accountants, what should Alberto do upon discovering this
evidence?
a. Notify the controller.
b. Notify the sales managers involved.
c. Notify the president of the corporation.
d. Ignore the evidence because he is not part of the Sales Department.
______10. Which of the following best describes the cost of capital?
a. The net income and expenses of an equity.
b. The financial assets less financial liabilities of an entity.
c. The assets, liabilities and equity of an entity.
d. The long-term liability and equity of an entity.
______11. Integrity is an ethical requirement for all financial managers. One aspect of
integrity requires
a. Performance of professional duties in accordance with applicable laws.
b. Avoidance of conflict of interest.
c. Refrain from improper use of inside information.
d. Maintenance of appropriate level of professional competence.

______12. The owners of a corporation are called

a. Stakeholders
b. Board of Directors
c. Managers
d. Shareholders
______13. An opportunity cost is
a. The difference in total costs that results from selecting one alternative instead of
another.
b. The profit foregone by selecting one alternative instead of another.
c. A cost that may be saved by not adopting an alternative.
d. A cost that may be shifted to the future with little or no effect on current
operations.
______14. A member of the top management team who is responsible for providing
timely and relevant data to support planning and control activities and for preparing
financial statements for external users
a. Chief Financial Officer
b. Controller
c. Chief Executive Officer
d. Treasurer
______15. The manager in charge of the accounting department in an organization.
a. Treasurer
b. Controller
c. Chief Financial Officer
d. Vice President Finance