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D076 Unit 5 Practice Questions with 100% correct answers
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D076 Unit 5 Practice Questions with 100% correct answers
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D076 Unit 5Practice(68 Questions
with 100% correct
answers)
When evaluating a company's performance, what
can variances on a company's cash budget
indicate?
-Variances show that expenses were necessarily
greater than income for the budget horizon.
-Variances are expected and should never pose a
concern for management.
-Variances are not useful for performance
evaluation of certain managers or divisions.
-Variances show that certain managers or divisions
are not meeting targets. - answer D
How far into the future do cash budgets usually
forecast?
-Between one and two weeks
-Between one and three years
-Between one month and one year
,-Between five and ten years - answer C
What are three principles of budgeting that are
important to know before beginning the budgeting
process?
-Keep records; develop savings, income, and
expense strategies; and use a method that meets
your needs and objectives
-Improve your credit score; understand the key
areas of savings, income, and expenses; and
categorize all expenses
-Know yourself, reduce variance in spending, and
consult a certified financial advisor
-Eliminate debt, evaluate your personal financial
performance, and consult a certified financial
advisor - answer A
What are the three main uses of cash budgets?
-Cash budgets are used to forecast future financial
need, aid in performance evaluation, and show
when corrective action is needed.
-Cash budgets show lenders how effective the
management of a business is, allow for corrective
action when needed, and increase a firm's degree
of leverage.
, -Cash budgets help companies know how much to
invest in capital, aid in expense tracking, and
predict when additional financing is needed.
-Cash budgets allow periodic performance
evaluation, inform investors of changes in net
income, and allow businesses to gain access to
credit. - answer A
What is the correct order of the three steps
necessary to create a cash budget?
-Estimate cash disbursements, predict expenses,
create the cash budget
-Determine cash receipts, estimate cash
disbursements, create the cash budget
-Create the cash budget, determine cash receipts,
estimate cash disbursements
-Evaluate income, create the cash budget, estimate
cash disbursements - answer B
Why is "put $50 in a savings account each month
for Christmas gifts" a better budgeting goal than
"save money for Christmas gifts"?
-Because "save money for Christmas gifts" is
unattainable
-Because it is specific and measurable
-Because it demonstrates a knowledge of the
correct steps of cash budgeting
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