Financial Management And Corporate Governance
Questions and Answers
- 1.
Insufficient working capital results in
- A.
Block of cash
- B.
Loosing interest
- C.
Lack of production
- D.
Lack of smooth flow of production
Correct Answer
D. Lack of smooth flow of productionExplanation
Insufficient working capital refers to a situation where a company does not have enough funds to cover its day-to-day operational expenses. This can lead to a lack of smooth flow of production as the company may struggle to purchase raw materials, pay employees, or maintain equipment. Without adequate working capital, the company may face delays in production, interruptions in the supply chain, and difficulties in meeting customer demands. Therefore, the lack of smooth flow of production is a direct consequence of insufficient working capital.Rate this question:
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- 2.
The liability which should be paid within a period of one year is known as
- A.
Current asset
- B.
Current liability
- C.
Fixed asset
- D.
Variable asset
Correct Answer
B. Current liabilityExplanation
Current liability refers to the debts or obligations that a company is expected to pay off within a period of one year. These can include short-term loans, accounts payable, accrued expenses, and other similar obligations. Current liabilities are an important aspect of a company's financial health as they represent the company's short-term financial obligations and its ability to meet them. Therefore, the correct answer is current liability.Rate this question:
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- 3.
The management of current assets is known as
- A.
Current asset management
- B.
Working capital management
- C.
Both a & b
- D.
None
Correct Answer
C. Both a & bExplanation
The management of current assets refers to the process of effectively managing and controlling the current assets of a company. This involves ensuring that there is an adequate level of working capital to meet short-term obligations and optimizing the use of current assets to generate maximum returns. Therefore, the correct answer is "Both a & b" as both "Current asset management" and "Working capital management" are terms used to describe the management of current assets.Rate this question:
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- 4.
The basic feature of a merger is
- A.
Transfer of assets
- B.
Transfer of management
- C.
Transfer of control
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A merger involves the combination of two or more companies into one entity. In this process, various aspects are involved, including the transfer of assets, management, and control. Asset transfer refers to the transfer of property, rights, and liabilities from one company to another. Management transfer involves the integration of the management teams of the merging companies, where decisions are made collectively. Control transfer refers to the transfer of ownership and decision-making power from one company to another. Therefore, all of the above options accurately describe the basic features of a merger.Rate this question:
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- 5.
Share exchange ratio is a ratio between the shares of Target firm and
- A.
Target firm
- B.
Acquiring firm
- C.
Merged firm
- D.
None
Correct Answer
B. Acquiring firmExplanation
The share exchange ratio refers to the ratio between the shares of the target firm and the acquiring firm. This ratio determines how many shares of the acquiring firm will be exchanged for each share of the target firm in a merger or acquisition. It is an important factor in determining the ownership structure and value of the merged entity.Rate this question:
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- 6.
If current assets are less than current liabilities, an entity has a ___________________
Correct Answer
working capital deficiencyExplanation
If current assets are less than current liabilities, it means that the entity does not have enough short-term resources to cover its short-term obligations. This situation is known as a working capital deficiency. It indicates that the entity may have difficulty in meeting its immediate financial obligations and may need to rely on external sources of funding or take measures to improve its cash flow.Rate this question:
- 7.
_________________________ identify the appropriate source of financing
Correct Answer
Short term financing - 8.
__________________ are all assets that can readily convert to cash to pay outsanding debts and cover liabilities.
Correct Answer
Current assetsExplanation
Current assets are all assets that can readily convert to cash to pay outstanding debts and cover liabilities. These assets include cash, cash equivalents, accounts receivable, inventory, and short-term investments. They are expected to be converted into cash within a year or the normal operating cycle of a business. Current assets are important for assessing a company's liquidity and ability to meet its short-term obligations. By having a sufficient amount of current assets, a company can ensure that it has the necessary funds to cover its immediate financial obligations.Rate this question:
- 9.
_______________________ refers to the efficiencies primarily associated with demand side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products.
Correct Answer
Economy of scopeExplanation
Economy of scope refers to the efficiencies primarily associated with demand side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products. This means that by expanding or reducing the range of products offered, a company can optimize its marketing and distribution efforts to reach a wider or more targeted audience, resulting in cost savings and improved profitability. It allows companies to leverage their existing resources and capabilities to serve multiple product lines, thereby reducing costs and increasing overall efficiency.Rate this question:
- 10.
A low number of days indicates that the company collects its outstanding ________________ quickly
Correct Answer
receivablesExplanation
A low number of days indicates that the company collects its outstanding receivables quickly. This means that the company is efficient in collecting payments from its customers or clients. It suggests that the company has effective credit and collection policies in place, which helps in minimizing the time taken to receive payments for goods or services provided. This is beneficial for the company's cash flow and overall financial health.Rate this question:
- 11.
Most of the organisations are producing value-based codes and building values into their corporate strategies, for all of the following reasons EXCEPT which one?
- A.
Corporate values are important for giving guidance to staff about what the expectations an employer has of them with regard to their behaviour.
- B.
Corporate values are made mandatory under the statutory laws, and failure to comply amounts to legal breach.
- C.
Corporate values seek to ensure a consistency of conduct across the entire organisation.
- D.
Corporate values directly relate to organisation’s risk management strategies and supports reputation and credibility.
Correct Answer
B. Corporate values are made mandatory under the statutory laws, and failure to comply amounts to legal breach.Explanation
The given answer states that corporate values are not made mandatory under statutory laws and failure to comply does not amount to a legal breach. This means that organizations are not legally obligated to have corporate values. However, the other options provide valid reasons for organizations to have value-based codes and incorporate values into their corporate strategies. Corporate values provide guidance to staff, ensure consistency of conduct, and support risk management strategies and reputation.Rate this question:
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- 12.
i A company director could act in breach of the duty of care, and yet could still comply with the principles of corporate governance. ii A professional accountant acting as a company director has got a strict duty of care towards the shareholders. Which of the following is CORRECT in relation to the above statements?
- A.
I only
- B.
Ii only
- C.
I and ii
- D.
None of them
Correct Answer
A. I onlyExplanation
The correct answer is "i only" because the first statement acknowledges that a company director could act in breach of the duty of care, which refers to the responsibility to act in the best interest of the company and its stakeholders. However, it also states that the director could still comply with the principles of corporate governance, which are guidelines and practices that ensure the company is managed effectively and ethically. This means that even if a director fails in their duty of care, they could still adhere to the broader principles of corporate governance. The second statement is not mentioned in the explanation.Rate this question:
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- 13.
Which ONE of the following is the highest court in Nigeria?
- A.
The Court of Appeal
- B.
The Supreme Court
- C.
The High Court
- D.
The Crown Court
Correct Answer
B. The Supreme CourtExplanation
The Supreme Court is the highest court in Nigeria. It is the final appellate court in the country and has the ultimate authority to interpret and apply the law. The Supreme Court is responsible for hearing appeals from lower courts and has the power to make final decisions on legal matters. It plays a crucial role in ensuring the uniformity and consistency of the law in Nigeria.Rate this question:
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- 14.
Which of the following examples of performance amounts to good consideration? (i) The performance of an existing duty under the general law. (ii) The performance of an existing contract in return for a promise by a third party. (iii) The performance of an act, followed by a promise to pay for that act.
- A.
(i) only
- B.
(ii) only
- C.
(i) and (ii) only
- D.
(iii) only
Correct Answer
B. (ii) onlyExplanation
The performance of an existing contract in return for a promise by a third party constitutes good consideration. This is because both parties are exchanging something of value - the performance of the contract and the promise by the third party. In contrast, the performance of an existing duty under the general law does not involve any new consideration, and the performance of an act followed by a promise to pay for that act is considered past consideration, which is generally not considered good consideration.Rate this question:
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- 15.
Legal and disciplinary frameworks provide ALL of the following EXCEPT which one?
- A.
An effective means of challenging serious wrong-doing
- B.
Deterrents to bad practice through punishment and censure
- C.
Means of controlling behaviour
- D.
Financial compensation only to the affected parties
Correct Answer
D. Financial compensation only to the affected partiesExplanation
Legal and disciplinary frameworks provide an effective means of challenging serious wrong-doing, deterrents to bad practice through punishment and censure, and means of controlling behavior. However, they do not solely provide financial compensation to the affected parties.Rate this question:
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- 16.
‘How much recycling of waste and paper undertaken by an organisation?’ relates to which one of the following?
- A.
Corporate governance of an organisation
- B.
Corporate values of an organisation
- C.
Social responsibility of an organisation
- D.
Corporate policy towards sustainability
Correct Answer
C. Social responsibility of an organisationExplanation
The question is asking about the extent to which an organization recycles waste and paper, which is related to the social responsibility of the organization. Social responsibility refers to the ethical and moral obligations of an organization to contribute to the welfare of society and the environment. By recycling waste and paper, an organization demonstrates its commitment to sustainable practices and reducing its impact on the environment. Therefore, the correct answer is social responsibility of an organization.Rate this question:
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- 17.
The system by which companies are directed and controlled is called
- A.
Corporate regulations
- B.
Corporate governance
- C.
Corporate administration
- D.
Corporate compliance
Correct Answer
B. Corporate governanceExplanation
Corporate governance refers to the system and structure through which companies are directed and controlled. It encompasses the processes, policies, and regulations that ensure transparency, accountability, and fairness in the decision-making and management of a company. It involves the relationship between the board of directors, management, shareholders, and other stakeholders, and aims to promote ethical behavior, protect the interests of shareholders, and enhance the long-term value of the company. Corporate governance is crucial for maintaining investor confidence, attracting investment, and ensuring the sustainable growth and success of a company.Rate this question:
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- 18.
Which ONE of the following remedies is NOT available for a breach of a contract to provide personal services?
- A.
Damages
- B.
A decree of specific performance
- C.
An injunction
- D.
An action for the price
Correct Answer
B. A decree of specific performanceExplanation
A decree of specific performance is not available as a remedy for a breach of a contract to provide personal services. Specific performance is a legal remedy where the court orders the breaching party to fulfill their contractual obligations. However, personal services are considered unique and cannot be forced upon someone. Therefore, the court cannot order specific performance for personal services.Rate this question:
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- 19.
Which ONE of the following is not an equitable remedy?
- A.
Damages
- B.
Specific performance
- C.
Rescission
- D.
Injunction.
Correct Answer
A. DamagesExplanation
Damages is not an equitable remedy because it is a legal remedy. Equitable remedies are those that are granted by a court of equity, such as specific performance, rescission, and injunction. Damages, on the other hand, are a monetary award given to the injured party to compensate for their loss. While damages can be awarded in both legal and equitable cases, they are not considered an equitable remedy in and of themselves.Rate this question:
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- 20.
Which ONE of the following correctly describes the "maintenance of capital" principle?
- A.
A company cannot use its share capital which must be set aside as a fund for creditors
- B.
In general, a company can use its share capital for any reason whatsoever, as long as it ensures that there is sufficient remaining to meet the company’s debts
- C.
In general, a company must use its capital for the purposes of the compant and cannot return it to its members
- D.
A company cannot use its share capital and may only return it to its members with the permission of the court
Correct Answer
C. In general, a company must use its capital for the purposes of the compant and cannot return it to its members -
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Apr 25, 2024Quiz Edited by
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Jun 28, 2012Quiz Created by
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