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CMA Intermediate · Financial Management and Business Data Analytics · Introduction to Financial Management

Which statement about the scope of financial management is correct?

Financial management covers estimating and procuring funds, allocating them efficiently to assets and working capital, and deciding the distribution of surplus to owners. It is therefore broader than long-term fund raising, accounting or treasury cash handling alone.

  1. AIt covers only raising of long-term funds and excludes use of funds
  2. BIt covers procurement of funds, their efficient allocation and distribution of surplus to ownersCorrect
  3. CIt is limited to preparation of statutory accounts and tax filing
  4. DIt deals only with day-to-day cash handling by the treasury

Explanation

The scope of financial management includes estimating fund requirements, raising funds from suitable sources, investing them in assets and distributing returns. It is wider than accounting or cash handling and includes both acquisition and use of funds.

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