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Questions and Answers
Financial practices remain static and do not adapt to changes in the business environment.
Financial practices remain static and do not adapt to changes in the business environment.
False
Finance is governed by whimsical figures and information.
Finance is governed by whimsical figures and information.
False
Finance is a separate specialized field that operates closely with economics and accounting.
Finance is a separate specialized field that operates closely with economics and accounting.
True
Accounting deals primarily with economic variables and the preparation of financial statements.
Accounting deals primarily with economic variables and the preparation of financial statements.
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Economics examines variables like price and income to understand resource allocation.
Economics examines variables like price and income to understand resource allocation.
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The financial activities of a business happen randomly without a defined system.
The financial activities of a business happen randomly without a defined system.
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The system in finance ensures that activities are coordinated with the structure of the business.
The system in finance ensures that activities are coordinated with the structure of the business.
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Financial processes are designed to detract from the ultimate objective of a business.
Financial processes are designed to detract from the ultimate objective of a business.
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The fundamental objective of finance is to ensure that financial resources are mismanaged and underutilized.
The fundamental objective of finance is to ensure that financial resources are mismanaged and underutilized.
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Financial resources are primarily intended to support both current operating activities and long-term investments.
Financial resources are primarily intended to support both current operating activities and long-term investments.
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Operating expenditures are associated with the acquisition of fixed assets like buildings and machinery.
Operating expenditures are associated with the acquisition of fixed assets like buildings and machinery.
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Financial investments yield returns in the form of dividends and interest payments.
Financial investments yield returns in the form of dividends and interest payments.
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Finance is classified into private finance and public finance.
Finance is classified into private finance and public finance.
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Study Notes
Both a Science and an Art
- Finance operates within a framework of established industry and professional standards, emphasizing factual and reliable data.
- Financial decisions are founded on scientific processes, ensuring that information is credible and not arbitrarily created.
- The evolving nature of finance reflects its artistic side, adapting to complexities in business operations and the broader economic environment.
- Changes in business practices dictate ongoing adaptations in financial services and strategies.
Application of Economic and Accounting Concepts and Principles
- Finance has transitioned from being part of Economics to an independent field closely linked with both economics and accounting.
- Economics focuses on resource allocation to meet human needs, analyzing various economic variables like price, demand, and income.
- Accounting entails the systematic recording of business transactions and preparation of financial statements, adhering to Philippine Financial Reporting Standards (PFRSs) aligned with international norms.
System, Structure, and Process
- Financial activities in a business follow a defined system, structure, and processes, ensuring coherence and alignment with overall business objectives.
- The structured approach coordinates financial activities, facilitating the efficient utilization of resources to achieve strategic goals.
- Clear processes are essential in directing resources effectively within any business organization.
Management, Allocation, and Utilization
- Fundamental objective of finance is to manage, allocate, and utilize limited financial resources.
- Efficient handling of financial resources is essential for achieving business financial goals.
- Wise distribution of financial resources is crucial, including balancing current and non-current assets.
- Sources of funds should consider the trade-off between risk and return.
- Effective financial management significantly impacts the overall performance of a business.
Financial Resources, Investments, and Expenditures
- Financial resources encompass funds provided by owners or creditors.
- Funds are used for both current operations and long-term activities.
- Financial investments aim to generate income and promote growth, yielding returns in the form of interest and bonds.
- Financial expenditures are categorized into operating and capital expenditures.
- Operating expenditures are ongoing costs such as salaries, utilities, and travel expenses.
- Capital expenditures refer to long-term investments in assets like buildings, machinery, and land.
Areas of Finance
- Finance is classified into two main categories:
- Private finance, which deals with individual or corporate financial management.
- Public finance, focusing on government financial activities and public sector spending.
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Description
Explore the dual nature of finance as both a science and an art. This quiz highlights how financial decisions are grounded in scientific principles and industry standards, rather than whimsical data. Test your understanding of the critical role of reliable financial information in decision-making.
