36 exam-style questions on Introduction to finance — topic 3.1 of Finance and accounts in the IB Business Management syllabus — with answers and explanations. Samples below; the full set is free with an account.
Which of the following is a role of finance in a business rather than the marketing or operations function?
Answer: Preparing budgets and monitoring cash flow
The finance function raises funds and manages budgets, cash flow and accounts; promotion and market research are marketing roles, and quality control is an operations role.
A start-up needs finance to purchase machinery that will be used for many years. State the type of capital this best represents.
Answer: Fixed capital
Fixed capital is money invested in long-term fixed assets such as machinery; working capital funds day-to-day operations.
Which statement best explains why finance is a functional area of a business?
Answer: It manages the funds needed by all other functions
Finance is a functional area because it plans, raises and controls the money that every other department relies on to operate.
A sustainability-focused firm invests in solar panels to cut long-term energy costs. State how this spending is classified.
Answer: Capital expenditure
The solar panels are a long-term fixed asset, so the purchase is capital expenditure, even though it also supports sustainability aims.
A business regularly cannot pay suppliers on time despite reporting healthy profits. Determine the most likely underlying problem.
Answer: Poor working capital management
Being profitable but unable to pay bills points to a liquidity problem: insufficient working capital or poor cash flow management.
State which of the following best describes the role of finance in supporting business change, such as launching an innovative new product.
Answer: Finance provides and controls the funds for the change
Finance enables change by funding research, development and launch costs and by monitoring the budget; it cannot remove risk or guarantee success.
That was 6 of 36 Introduction to finance questions.
Practise all 36 freeStateAO1 · 2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
DefineAO1 · 2 marks
Give the precise meaning — one sentence, the key terms in it, no example needed unless asked.
OutlineAO1 · 2 marks
A brief account or summary: the main points in two or three sentences, no evaluation.
36 Introduction to finance questions — free with an account. Spaced repetition, streaks and full exam simulations included.
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