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FIN3702 EXAM PACK AND SOLUTIONS 2022
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FIN3702 EXAM PACK AND SOLUTIONS 2022
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FIN3702 EXAMPACK AND
SOLUTIONS 2022
, FIN3702/101
8.4.1 Semester 1
Kindly note that there are two compulsory assignments for the first semester of this
module. Both assignments constitute only multiple-choice questions. The average mark
of both these assignments will be used to calculate your year mark. We advise you to
submit both these assignments online via myUnisa.
ASSIGNMENT 01 (compulsory)
20 MULTIPLE-CHOICE QUESTIONS (20 marks)
DUE DATE: 24/03/2020
UNIQUE NUMBER: 689635
AIM: The purpose of this assignment is to evaluate your knowledge regarding the
fundamental aspects of cash flow management, financial planning, working capital
management and the management of current assets and/or liabilities. To complete this
assignment you must study chapters 3, 14 and 15 of your prescribed book and the
relevant study units in your study guide.
Answer the following questions and submit your assignment at https://my.unisa.ac.za.
QUESTION 1
Which one of the following is the correct term used to define the depreciable amount plus the
residual value of fixed assets?
1. depreciation expense
2. cost of fixed asset
3. accumulated depreciation
4. future economic benefits of a fixed asset
QUESTION 2
Which one of the following will increase the balance on the cash flow statement of the firm?
1. sale of stock on credit
2. loan repayment to banks
3. debtors paying amounts owed
4. bank approving an overdraft facility
QUESTION 3
Which of the following options can most likely explain a negative cash flow from operating
activities?
1. repayment of a loan
2. investment in new fixed assets
3. an increase in dividend payments
4. a rise in credit sales
,QUESTION 4
Allied Bank Ltd has offered Diamond Company the following alternatives in response to the
R175 000 one-year loan application made to the bank.
alternative 1: 12% discount interest, with an 8% compensating balance.
alternative 2: 14% simple interest with interest paid monthly.
What will be the effective annual rate if the Diamond Company chooses to take the cheaper
alternative?
1. 12.50%
2. 13.63%
3. 14.00%
4. 16.08%
QUESTION 5
Betty’s Furniture Suppliers maintains an average inventory of 2 000 desks to supply to
schools. The carrying cost per desk is estimated at R1.25. Betty places an order for 4 000
desks on the first of each quarter and the order cost is R80. What will Bettys carrying cost be if
her firm uses the EOQ method of inventory management?
1. R 894
2. R 1 215
3. R 2 500
4. R 3 756
QUESTION 6
Cash flow to the firm can be classified into …
1. operating activities and financing activities.
2. operating activities and investing activities.
3. investing activities and financing activities.
4. operating activities, financing activities and investing activities.
QUESTION 7
ABSA Bank Ltd has offered Charlies Pizza Parlour the following in response to a R100 000
one-year loan application which was made to the bank. The stated rate was 7% with a 20%
compensating balance. What will the effective annual rate be?
1. 7.00%
2. 8.40%
3. 8.75%
4. 13.00%
10
, QUESTION 8
Jameson Scott purchased inventory to the value of R100 000. The terms of sale were 3/15 net
45. What is the effective annual interest rate if he paid the full amount in 45 days?
1. 28.00%
2. 37.60%
3. 44.90%
4. 44.30%
QUESTION 9
A compensating balance can be defined as …
1. compensation to a financial institution for services rendered by providing it with a
deposit of funds.
2. the amount of prepaid interest on a loan.
3. compensation for possible losses on a marketable securities portfolio.
4. a level of inventory held to compensate for variations in usage rate and lead time.
QUESTION 10
The cost of a fixed asset minus accumulated depreciation of a fixed asset can be defined as …
1. historical cost of a fixed asset.
2. book value of a fixed asset.
3. market value of a fixed asset.
4. recoverable amount of a fixed asset.
QUESTION 11
Which of the following statements regarding safety stock is correct?
1. The greater the chance of running out of stock the smaller the safety stock.
2. The larger the opportunity cost of the funds invested in inventory, the larger the safety
stock.
3. The greater the uncertainty associated with forecasted demand, the smaller the safety
stock
4. The higher the profit margin per unit the higher the safety stock necessary.
QUESTION 12
The strict application of the percent of sales method of preparing the pro forma income
statement assumes all costs are …
1. fixed.
2. constant.
3. independent.
4. variable.
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