116) The cash budget is prepared before the operating budget.
117) The cash budget is prepared before the budgeted balance sheet is prepared.
118) The cash budget helps managers determine whether or not the company requires financing in a given month.
119) Budget committee is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.
120) A company sells goods and offers credit terms of “net 30 days.” What does this reveal to the company that sold the goods?
A) It does not have to ship the goods for 30 days.
B) It cannot recognize the sales credit for 30 days.
C) It offers a 30% discount for customers that use credit cards.
D) The customer has up to 30 days to pay back the seller for the goods purchased without penalty.
121) Which of the following items is a component of a cash payments budget?
A) Bad debt expense
B) Depreciation expense
C) Cash dividends
D) Gains on sales of equipment
122) Which of the following types of cash outlays contains its own budget?
A) Capital expenditures
C) Income taxes
D) All of the above
123) A combined cash budget includes all of the following except
A) projected cash balance at the end of the month.
B) projected cash collections and cash payments.
C) projected borrowings and repayments.
D) All of the above are shown on the combined cash budget.
124) A company should ________ when projecting cash receipts for a given month.
A) include only cash collections from sales made in that month
B) only list COD sales made in that month
C) only list credit sales made in that month
D) include cash to be collected in that month regardless of when the sale was made
125) “Financial budget” is best described by which of the following?
A) A company's plan to purchase property, plant and equipment, and other long-term assets
B) A budget that projects cash inflows, cash outflows, and the end of period budgeted balance sheet
C) A budget that shows projected sales, purchases, and operating expenses
D) A system for evaluating the performance of each responsibility center and its manager