Exam 17: Financial Forecasting and Planning

Which of the following is always a non-cash expense?

Your firm is trying to determine its cash disbursements for the next two months (June and July).In any month,the firm makes purchases of 60% of that month's sales,which are paid the following month.In addition,the firm incurs the following costs every month and pays for them in the month the expenses are incurred: wages/salaries of $10,000,rent of $4,000,and miscellaneous cash expenses of $1,000.Depreciation amortised on a monthly basis is $2,000.June's sales are expected to be $100,000,and July's sales are expected to be $150,000.Cash disbursements for the month of July are expected to be

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

What is meant by discretionary financing?

Cash budgets usually include details such as the timing of materials purchases,interest payments,and the like.

The cash budget can be used to provide an estimate of the firm's future financing needs.

The percent-of-sales method of forecasting makes which of the following assumptions?

Strategic planning encompasses all of the following EXCEPT

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

What is meant by spontaneous financing?

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?

Long-term financial plans must include capital expenditures.

Which of the following is a spontaneous source of financing?

Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014;sales were $3,450,000 in fiscal 2013.Assume the following figures for the fiscal year ending 2013: cash $70,000;accounts receivable $250,000;inventory $400,000;net fixed assets $520,000;accounts payable $235,000;and accruals $155,000.Use the percent-of-sales method to forecast cash for the fiscal year ending 2014.

Which of the following will increase cumulative borrowing in the cash budget?

Which of the following is a source of external capital?

The preparation of pro forma financial statements accomplishes which of the following objectives?

Which of the following will decrease discretionary funds needed?

Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014;sales were $3,450,000 in fiscal 2013.Assume the following figures for the fiscal year ending 2013: cash $70,000;accounts receivable $250,000;inventory $400,000;net fixed assets $520,000;accounts payable $235,000;and accruals $155,000.Use the percent-of-sales method to forecast accounts payable for the fiscal year ending 2014.

The projected change in retained earnings equals projected net income less any dividends to be paid.