5.1 The role of the finance function

• Budgeting is a key component of financial planning and control within the finance function.

  True
• The finance function ensures a business is financially stable and makes informed decisions to achieve its objectives.


  True
• How does the finance function contribute to financial stability through budgeting and forecasting?

  Ensuring informed decisions
• Match the department with its relationship to the finance function.

  Marketing ↔️ Pricing and budgeting support

  Operations ↔️ Evaluating capital expenditure

  Human Resources ↔️ Managing payroll

  IT ↔️ Implementing financial systems
• Cross-functional integration ensures financially sound decisions align with the business's overall strategy and objectives
• Match the finance function responsibility with its description:

  Financial Planning and Control ↔️ Budgeting, forecasting, and monitoring financial performance

  Financial Accounting ↔️ Preparing financial statements and reports

  Investment Appraisal ↔️ Evaluating potential investments and projects

  Working Capital Management ↔️ Managing cash flow, inventory, and accounts receivable/payable
• Steps in how the finance function helps businesses manage finances

  1️⃣ Financial Planning and Control

  2️⃣ Financial Accounting

  3️⃣ Investment Appraisal

  4️⃣ Working Capital Management

  5️⃣ Financing
• Financial planning and budgeting are essential for a business to maintain long-term viability.

  True
• The finance function is responsible for managing the company's financial resources and activities
• Working capital management involves managing cash flow, inventory, and accounts receivable/ payable
• Match the responsibility of the finance function with its description.

  Financial planning and control ↔️ Budgeting and forecasting

  Financial accounting ↔️ Preparing financial statements

  Investment appraisal ↔️ Evaluating potential projects

  Working capital management ↔️ Managing cash flow
• The finance function operates in isolation from other departments within a business.

  False
• What is the relationship of the finance function with other departments in a business?

  Collaborative
• What is the primary purpose of the finance function within a business?

  Managing financial resources
• The finance function helps businesses achieve their objectives by managing their financial resources effectively.


  True
• With which department does the finance function collaborate to manage payroll and employee benefits?

  Human Resources
• Match the finance function responsibility with its contribution to profitability:

  Financial Planning and Budgeting ↔️ Manages costs and allocates resources effectively

  Investment Appraisal ↔️ Evaluates profitable investment opportunities

  Working Capital Management ↔️ Improves cash flow and reduces borrowing costs

  Cost Control ↔️ Monitors and reduces expenses
• What is the main responsibility of the finance function within a business?

  Managing financial resources
• What does the finance function do in investment appraisal?

  Evaluates potential investments
• What is the role of financial planning and control in the finance function?

  Monitoring financial performance
• Securing funding through loans or equity is called financing
• How does the finance function collaborate with the marketing department?

  Supports pricing decisions
• Why is financial planning and budgeting crucial for a business?

  Ensures financial stability
• How does financial planning and budgeting contribute to profitability?

  Allocates resources effectively
• Financial control aims to manage resources, prevent fraud, and ensure accuracy
• What is the primary purpose of financial control within a business?

  Manage financial resources
• The finance function is responsible for budgeting, forecasting, and monitoring financial performance
• Managing cash flow, inventory, and accounts receivable is called working capital management
• Match the finance function responsibility with its description:

  Financial Planning and Control ↔️ Ensures stability and informs decisions

  Financial Accounting ↔️ Provides insights into financial position
• The finance function ensures financial stability by fulfilling its responsibilities and making informed strategic decisions.

  True
• The finance function evaluates the financial viability of operational decisions, such as capital expenditure.

  True
• The finance function contributes to company profitability by allocating resources effectively and managing costs.

  True
• Financial control ensures compliance and prevents fraud, while auditing verifies financial integrity.


  True
• What is the main purpose of the finance function within a business?

  Managing financial resources
• What does investment appraisal involve within the finance function?

  Evaluating potential investments
• Order the main responsibilities of the finance function.

  1️⃣ Financial planning and control

  2️⃣ Financial accounting

  3️⃣ Investment appraisal

  4️⃣ Working capital management

  5️⃣ Financing
• The finance function prepares financial statements to provide information about the company's financial position, cash flow, and profitability
• Cross-functional integration ensures the business makes financially sound decisions aligned with its overall strategy
• The finance function operates in isolation within a business.

  False
• The finance function plays a crucial role in ensuring a business is financially stable and making informed decisions