QUESTION Which type of forecasting involves a prediction about how money will come in and go out of a firm in the near future, usually within the next 1 to 3 months? A) short-term forecasting B) long-term forecasting C) cash flow forecasting D) extended forecasting E) budget forecasting ANSWER Answer: C Explanation: C) Cash […]
QUESTION How far out do most lenders want financial plans to extend? A) 1 month B) 6 months C) 1 year D) 2 years E) 5 years ANSWER Answer: C Explanation: C) Most short-term lenders are interested in 1-year financial plans. Long-term investors, such as stockholders, care more about long-range financial plans, such as […]
QUESTION Which of the following BEST defines solvency? A) being able to pay debts when they become due B) managing money in the optimum way C) earning more money than the previous year D) assuring that gains outweigh losses E) predicting revenues, costs, and expenses accurately ANSWER Answer: A Explanation: A) To be solvent […]
QUESTION Which of the following is among the four principal types of budgets? A) forecasting budget B) long-term budget C) short-term budget D) capital budget E) discretionary budget ANSWER Answer: D Explanation: D) The four principal types of budgets are operating budgets, capital budgets, cash budgets, and master budgets.
QUESTION What is the time period over which a budget typically shows estimated revenue and expenses? A) one month B) six months C) one year D) two years E) five years ANSWER Answer: C Explanation: C) A typical budget shows estimated revenues and expenses for a time period of one year.
QUESTION What is a budget? A) a complete statement of financial management B) a financial plan covering stock options C) a financial plan showing estimated revenues and expenses D) a plan for implementing financial controls E) an estimate of the cash flow for a period of time ANSWER Answer: C Explanation: C) One part […]
QUESTION Which of the following is TRUE of the long-term forecast? A) It must go out no further than the next 5 years. B) It can go out as little as 6 months. C) It may be varied to reflect different overall strategic plans. D) It identifies a firm’s sales goals and specifies the costs […]
QUESTION Which type of forecast is a prediction for the next 4 months to 1 year? A) short-term forecast B) long-term forecast C) cash flow forecast D) extended forecast E) budget forecast ANSWER Answer: A Explanation: A) A short-term forecast makes a prediction for the next 4 months to 1 year.
QUESTION Spartan Furniture wants to identify its sales and production goals and the costs required to meet those goals. Which type of budget does it need? A) capital budget B) cash budget C) master budget D) operating budget E) discretionary budget ANSWER Answer: D Explanation: D) Operating budgets identify a firm’s sales and production […]
QUESTION Which two types of budgets are referred to as financial budgets? A) capital budgets and cash budgets B) capital budgets and operating budgets C) cash budgets and operating budgets D) cash budgets and master budgets E) master budgets and operating budgets ANSWER Answer: A Explanation: A) Capital budgets and cash budgets are called […]
