Question 1

Long-term financial plans require that the firm have well-defined goals and objectives.

Accepted Answer

A) True 
 B)False

Question 2

Based on the information in Table 3,what are Thompson's projected total receipts (collections)for March?

Accepted Answer

A) $400,000 
B) $310,000 
C) ($20,000) 
D) $320,000 
A) $400,000 
B) $310,000 
C) ($20,000) 
D) $320,000

Question 3

Based on the information in Table 1,what is Dorian Industries' total disbursement in May (not including interest on short-term borrowing)?

Accepted Answer

A) $300,000 
B) $240,000 
C) $25,900 
D) ($60,000) 
A) $300,000 
B) $240,000 
C) $25,900 
D) ($60,000)

Question 4

When fixed expenses increase relative to sales,it indicates that there is not enough productive capacity to absorb an increase in sales.

Accepted Answer

A) True 
 B)False

Question 5

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

Accepted Answer

A) True 
 B)False

Question 6

A company collects 60% of its sales during the month of the sale,30% one month after the sale,and 10% two months after the sale.The company expects sales of $10,000 in August,$20,000 in September,$30,000 in October,and $40,000 in November.How much money is expected to be collected in October?

Accepted Answer

A) $25,000 
B) $15,000 
C) $35,000 
D) None of the above 
A) $25,000 
B) $15,000 
C) $35,000 
D) None of the above

Question 7

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Accepted Answer

A) The payment of accounts payable 
B) The payment of depreciation expense 
C) The payment of accrued income taxes 
D) All of the above 
A) The payment of accounts payable 
B) The payment of depreciation expense 
C) The payment of accrued income taxes 
D) All of the above

Question 8

The most commonly used method for making financial forecasts is the percent-of-sales method.

Accepted Answer

A) True 
 B)False

Question 9

Long-term financial plans typically encompass

Accepted Answer

A) 6 to 12 months. 
B) about 5 years. 
C) 5 to 10 years. 
D) the entire lifecycle of the corporation. 
A) 6 to 12 months. 
B) about 5 years. 
C) 5 to 10 years. 
D) the entire lifecycle of the corporation.

Question 10

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

Accepted Answer

A) True 
 B)False

Question 11

Discretionary financing needs implies

Accepted Answer

A) that management may choose between various forms of debt and equity. 
B) that the purchases being financed are optional rather than necessary. 
C) that management has considerable discretion in how to dispose of retained earnings. 
D) that management may choose between debt,new equity or retained earnings. 
A) that management may choose between various forms of debt and equity. 
B) that the purchases being financed are optional rather than necessary. 
C) that management has considerable discretion in how to dispose of retained earnings. 
D) that management may choose between debt,new equity or retained earnings.

Question 12

Based on the information in Table 1,what is Dorian Industries' ending cash balance (before borrowing)in March?

Accepted Answer

A) $10,000 
B) $25,000 
C) $20,000 
D) ($30,000) 
A) $10,000 
B) $25,000 
C) $20,000 
D) ($30,000)

Question 13

Broad Cloth,Inc.'s average collection period is 15 days.The vice-president of marketing has projected credit sales of $2.million for October,$2.5 million for November and $3 million for December.Compute cash collections for November and December.Assume that all months have 30 days.

Accepted Answer

November collections = last 50% of Octob

Question 14

Depreciation expense is a deduction from cash flow in the cash budget.

Accepted Answer

A) True 
 B)False

Question 15

The percent-of-sales method is more detailed than the cash budget method.

Accepted Answer

A) True 
 B)False

Question 16

Miller Metalworks had sales in November of $60,000,in December of $40,000,and in January of $80,000.Miller collects 40% of sales in the month of the sale and 60% one month after the sale.Calculate Miller's cash receipts for January.

Accepted Answer

A) $44,000 
B) $56,000 
C) $64,000 
D) $72,000 
A) $44,000 
B) $56,000 
C) $64,000 
D) $72,000

Question 17

Because accounts payable and accrued expenses increase with sales,they represent sources of spontaneous financing.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT a basic function of a budget?

Accepted Answer

A) Budgets indicate the need for future short-term financing. 
B) Budgets provide the basis for corrective action when actual figures differ from the budgeted figures. 
C) Budgets compare historical costs of the firm with its current cost performance. 
D) Budgets allow for performance evaluation. 
A) Budgets indicate the need for future short-term financing. 
B) Budgets provide the basis for corrective action when actual figures differ from the budgeted figures. 
C) Budgets compare historical costs of the firm with its current cost performance. 
D) Budgets allow for performance evaluation.

Question 19

A budget is a forecast of future events.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the basic functions that budgets perform for a firm.

Accepted Answer

The budget is a short-term financial pla

Long-term financial plans require that the firm have well-defined goals and objectives.

Based on the information in Table 3,what are Thompson's projected total receipts (collections)for March?

Based on the information in Table 1,what is Dorian Industries' total disbursement in May (not including interest on short-term borrowing)?

When fixed expenses increase relative to sales,it indicates that there is not enough productive capacity to absorb an increase in sales.

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

A company collects 60% of its sales during the month of the sale,30% one month after the sale,and 10% two months after the sale.The company expects sales of $10,000 in August,$20,000 in September,$30,000 in October,and $40,000 in November.How much money is expected to be collected in October?

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

The most commonly used method for making financial forecasts is the percent-of-sales method.

Long-term financial plans typically encompass

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

Discretionary financing needs implies

Based on the information in Table 1,what is Dorian Industries' ending cash balance (before borrowing)in March?

Broad Cloth,Inc.'s average collection period is 15 days.The vice-president of marketing has projected credit sales of $2.million for October,$2.5 million for November and $3 million for December.Compute cash collections for November and December.Assume that all months have 30 days.

Depreciation expense is a deduction from cash flow in the cash budget.

The percent-of-sales method is more detailed than the cash budget method.

Miller Metalworks had sales in November of $60,000,in December of $40,000,and in January of $80,000.Miller collects 40% of sales in the month of the sale and 60% one month after the sale.Calculate Miller's cash receipts for January.

Because accounts payable and accrued expenses increase with sales,they represent sources of spontaneous financing.

Which of the following is NOT a basic function of a budget?

A budget is a forecast of future events.

Discuss the basic functions that budgets perform for a firm.

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 17: Financial Forecasting and Planning

Long-term financial plans require that the firm have well-defined goals and objectives.

Based on the information in Table 3,what are Thompson's projected total receipts (collections)for March?

Based on the information in Table 1,what is Dorian Industries' total disbursement in May (not including interest on short-term borrowing)?

When fixed expenses increase relative to sales,it indicates that there is not enough productive capacity to absorb an increase in sales.

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

A company collects 60% of its sales during the month of the sale,30% one month after the sale,and 10% two months after the sale.The company expects sales of $10,000 in August,$20,000 in September,$30,000 in October,and $40,000 in November.How much money is expected to be collected in October?

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

The most commonly used method for making financial forecasts is the percent-of-sales method.

Long-term financial plans typically encompass

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

Discretionary financing needs implies

Based on the information in Table 1,what is Dorian Industries' ending cash balance (before borrowing)in March?

Broad Cloth,Inc.'s average collection period is 15 days.The vice-president of marketing has projected credit sales of $2.million for October,$2.5 million for November and $3 million for December.Compute cash collections for November and December.Assume that all months have 30 days.

Depreciation expense is a deduction from cash flow in the cash budget.

The percent-of-sales method is more detailed than the cash budget method.

Miller Metalworks had sales in November of $60,000,in December of $40,000,and in January of $80,000.Miller collects 40% of sales in the month of the sale and 60% one month after the sale.Calculate Miller's cash receipts for January.

Because accounts payable and accrued expenses increase with sales,they represent sources of spontaneous financing.

Which of the following is NOT a basic function of a budget?

A budget is a forecast of future events.

Discuss the basic functions that budgets perform for a firm.

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Working Capital Management

International Business Finance

Corporate Risk Management

Filters