Chap013 - Chapter 13 The Financing Business Process...

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Unformatted text preview: Chapter 13, The Financing Business Process True/False Questions 1. The financing business process provides the capital resources an enterprise needs to fund all aspects of its operations. Ans: True 2. The only mechanism by which enterprises acquire cash is debt financing. Ans: False Response: Enterprises may also acquire cash by equity financing. 3. With debt financing, an enterprise borrows cash from one or more external business partners for a specified time period and with the agreement that the enterprise will pay a specified interest rate in addition to the principal balance. Ans: True 4. At the value system level, the financing process is the point of contact between an enterprise and its employees. Ans: False Response: At the value system level the financing process is the point of contact between an enterprise and its investors and creditors. 5. At the value chain level, cash is typically made available by the financing process to the revenue process. Ans: False Response: The revenue process typically makes cash available to the financing process; the financing process typically makes cash available to the acquisition/payment and payroll processes 6. Sufficient cash availability enables enterprises to purchase in quantity to obtain more favorable prices and to take advantage of cash discounts. Ans: True 7. Cash is both the resource acquired and the resource given in the financing process. Ans: True 252 Dunn/Cherrington/Hollander, Enterprise Information Systems: A Pattern Based Approach, 3e Chapter 13, The Financing Business Process 8. In most enterprise systems, cash is represented as a type-level entity because it is normally not possible or practical to specifically identify each coin and piece of currency stored by the company at any given time. Ans: True 9. The only attribute that typically needs to be captured regarding a cash requisition event is the dollar amount of cash identified as needed. Ans: False Response: The date and time of the requisition are also important attributes to capture 10. New data entered as a result of a cash requisition event are typically entered into the cash requisition table and in the table that implements the proposition relationship between the cash requisition event and the cash resource. Ans: True 11. In equity financing, the mutual commitment event is typically called a loan agreement and is represented by a promissory note or bond certificate. Ans: False Response: Loan agreements are part of debt financing; the mutual commitment event in equity financing is a stock issuance commitment event and is represented by shares of stock. 12. Shares of stock are guarantees of future cash flows to the shareholders that own them....
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Chap013 - Chapter 13 The Financing Business Process...

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