Which of the following organizations would be considered a nonbank institution?

a) Educational Employees Credit Union

b) Missouri Public School Retirement System

c) Southwest Savings Bank

d) Heartland Bank

Answer: B

Internal audits are important because:

a) the firm needs to keep a constant look out for employees and suppliers who may be committing fraud.

b) internal audits help to make accounting statements more reliable.

c) the firm uses the audits to determine desired profits for the following year.

d) they aid in the development of the firm's financial statements.

Answer: B

Short-term forecasts are based on:

a) sales revenues and future tax policies.

b) predictions of future performance of the firm's new products.

c) capital expenditures for the next five years.

d) expected sales revenues and expenses for the coming year.

Answer: D

One of the consequences of the recent financial crisis was ________.

a) increased confidence in the financial services markets

b) more government scrutiny and regulations

c) the dismissal of compliance officers as an integral part of the financial services industry

d) the knowledge that too much government regulation can disrupt the ethical direction that financial managers follow

Answer: B

If your job is to compare actual expenses incurred by your company with financial projections previously created, you are performing the task of ________.

a) the accounting cycle

b) financial ratio analysis

c) managerial control

d) financial control

Answer: D

Commercial finance companies accept more risk than banks, and the interest rates they charge are usually ________ than commercial banks.

a) about the same

b) more variable

c) higher

d) lower

Answer: C

Rachael Straub works in finance for a small microbrewery. This week Rachael is working on a budget for the next 12 months. She has been doing research to determine prices for the new equipment they will need in the next 12 months to stay competitive in this market. Which of the steps in financial planning is Rachael involved in?

a) Establishing financial controls and tax policy.

b) Forecasting short-term financial needs.

c) Developing financial statements for outside investors.

d) Developing budgets to meet financial needs.

Answer: B