Business Services Business Services Finance & Accounting 2

Question 1

What does ROI stand for and what does it measure?

Accepted Answer

Return on Investment — measures profitability relative to cost

Answer

Return on Investment (ROI) measures the gain or loss generated on an investment relative to its cost, expressed as a percentage.

Question 2

Which term describes the process of ensuring a company's internal records match its bank statement?

Accepted Answer

Bank reconciliation

Answer

Bank reconciliation is the process of matching a company's cash book balances against its bank statement to identify discrepancies.

Question 3

In financial management, what is 'working capital'?

Accepted Answer

Current assets minus current liabilities

Answer

Working capital equals current assets minus current liabilities and measures a company's short-term liquidity and operational efficiency.

Question 4

What is the role of an internal audit function in business services?

Accepted Answer

To independently assess compliance, risk management, and internal controls

Answer

Internal audit provides independent assurance that a company's risk management, governance, and internal control processes are adequate.

Question 5

Which financial ratio measures a company's ability to pay short-term obligations?

Accepted Answer

Current ratio

Answer

The current ratio (current assets divided by current liabilities) measures a company's ability to meet its short-term financial obligations.

Business Services Practice Test