Question 1: Answer the following short questions regarding financial management

1.1: The primary financial objective of any business is to:

1.2: Name 5 secondary objectives of financial management.

1.3: Explain 5 steps that can be taken to ensure that a business maintains a positive cash flow.

1.4: Name 4 reasons why budgets are drawn up.

Question 2: Basic financial concepts:

Match the following terms (a-j) to the most accurate description (2.1 - 2.10)

a) Solvency
b) Fixed assets c) Liquidity
d) Working capital
e) Assets
f) Profitability
g) Fixed overhead expenses h) Capital
i) Variable expenses
j) Current assets

2.1: Stock of raw materials, stock of finished goods, work in progress, prepaid expenses and deposits, cash on hand and at bank and outstanding debtors.

2.2: Items that are purchased to facilitate the running of the business (they are not pur- chased for resale)

2.3: The ability of a business to pay off its debt at any given time, even if all its activities should stop.

2.4: The relationship between the net income earned over a certain period, and the capital used in that period to generate income.

2.5: The money available to the business for the purchase of goods and services with a view to generating an income for the business.

2.6: The economic resources that an enterprise owns

2.7: Expenses that must be paid whether the business is trading or not.

2.8: The company's ability to keep making all its required payments regularly and on time.

2.9: Money used to acquire current assets such as stock or financing debtors.

2.10: Expenditure directly related to the manufacturing or sales processes of a company Question 3:

Question 3: Carefully read each of the following statements and state whether they are true (T) or false (F):

No Statement

3.1: The amount of an expense account is decreased by entries on the debit side.

3.2: The amount of an income account is increased by entries on the debit side.

3.3: An enforceable claim against others, such as account receivable is classified as an asset.

3.4: The acid test measures the ability of an organisation to meet its current liabilities without the most non-liquid item of current assets.

3.5: Solvency ratios investigate the effectiveness of employment of assets to realise sales

Question 5: Choose the concept (a-f) that match the statements (5.1-5.6):

a. Fixed asset register b. Journals

c. Income statements

d. Cash flow statements e. Ledgers

f. Balance sheets

5.1: Diaries of the day-to-day transactions of the business.

5.2: Summarise and categorise the information entered into journals.

5.3: Reflect the profit/loss made by company for a specific period.

5.4: Examples of ledgers.

5.5: Project the flow of money in a business for specified future period.

5.6: Snapshots of businesses at close of business on a specified day.

Question 6: Compile a pre-adjustment trail balance for Catherine's Cake Emporium.

The following balances appear in her general ledger on 31 July:

Bank (favourable) R 3 000

Capital R 20 000

Salaries R 8 000

Vehicles R 35 000

Creditors R 32 000

Debtors R 3 000

Sales R 7 000