Question 1

One of the functions of a finance manager is ________.

Accepted Answer

Finance managers are responsible for forecasting for the coming period to ensure that the organization is prepared for future financial challenges and opportunities.

Question 2

Forecasting entails drawing a financial picture of a company for the ________.

Accepted Answer

Forecasting can be done for a year, month or quarter, depending on the purpose and need for the forecast. Therefore, the best choice is D, as forecasting can cover all of these time periods.

Question 3

Financial forecasts are seldom right on the money,so to speak,but they do provide a yardstick by which a company can measure ________.

Accepted Answer

Financial forecasts are used to measure a company's adherence to its short-term plan. While they may not be completely accurate, they provide a basis for comparison and evaluation of a company's progress towards its goals in the short-term. The other answer choices do not accurately reflect the purpose of financial forecasts.

Question 4

A SOURCE of cash is utility payments.

Accepted Answer

Utility payments are considered a use of cash, not a source, because they represent cash outflows for services consumed.

Question 5

For the month of March,Rogue Retail will have cash receipts of $165,000 and cash disbursements of $150,000.If its beginning cash is $12,000 and its desired reserve is $20,000,what will be its shortfall or excess in cash for the month?

Accepted Answer

The calculation is as follows: Beginning cash ($12,000) + Cash receipts ($165,000) - Cash disbursements ($150,000) = Ending cash before reserve ($27,000). Desired reserve is $20,000, so the excess in cash for the month is $27,000 - $20,000 = $7,000.

Question 6

Pixi Boutique will have cash receipts of $57,000 in December and cash disbursements of $51,000 for this month.If its beginning cash is $12,000 and its desired reserve is $9,000,what will its excess be for December?

Accepted Answer

The answer of Pixi Boutique will have cash receipts of...

Question 7

In March,The Wonder Emporium will have cash receipts of $107,000 and cash disbursements of $110,000.If its beginning cash is $6,000 and its desired reserve is $5,000,what will be its shortfall in cash for the month?

Accepted Answer

Beginning cash + cash receipts - cash disbursements = Ending cash
$6,000 + $107,000 - $110,000 = $3,000

The ending cash of $3,000 is below the desired reserve of $5,000, so there is a shortfall in cash of $2,000. Therefore, the best choice is C, which indicates a shortfall of $8,000.

Question 8

Northwest Outdoor Store will have cash receipts of $83,000 in December and cash disbursements of $78,000 for this month.If its beginning cash is $3,000 and its desired reserve is $15,000,what will its excess be for December?

Accepted Answer

The cash balance at the end of December will be the beginning cash ($3,000) plus cash receipts ($83,000) minus cash disbursements ($78,000), totaling $8,000. Since the desired reserve is $15,000, there is a shortfall of $7,000, not an excess.

Question 9

A USE of cash is interest payments received.

Accepted Answer

Interest payments received are considered a source of cash, not a use, as they increase the cash balance.

Question 10

Short-term decisions are viewed as decisions that have short-term impacts and can be changed or modified at ________.

Accepted Answer

Short-term decisions are those which have a short-term impact and can be easily changed or modified at relatively low costs. This is because such decisions do not involve a significant amount of time, effort or resources, unlike long-term decisions which require extensive planning and investment. Therefore, option A is the best choice among the given options.

Question 11

For a firm,bank loans can be a source of cash and interest payments to the bank can be a use of cash.

Accepted Answer

Bank loans provide cash to the firm, which is a source of cash, while the interest payments made to the bank represent a use of cash.

Question 12

Which of the statements below is FALSE?

Accepted Answer

The statement that managers will look at the "final product" first to get an idea of where the company is ultimately heading and why it needs to look at sales forecasts and production schedules is false. The cash-management process typically starts with sales forecasting, followed by production scheduling and inventory management.

Question 13

Which of the statements below is FALSE?

Accepted Answer

Determining the number of manufacturing facilities is not a short-term decision, but a long-term decision as it has long-term impacts that are not easily reversed or changed at low cost.

Question 14

There are two primary tools used to forecast and set in action a company plan.Which of the tools below is one of these?

Accepted Answer

Pro forma statements are one of the primary tools used to forecast and set in action a company plan. These statements project the financial performance of a business in the future based on assumptions and past data. They can help businesses identify potential risks, opportunities, and areas where they need to focus their efforts. Profit budgets are also important in setting company plans, but they are not one of the primary tools mentioned in the question. Statements of retained earnings and income statements are financial statements used to report on past performance, but they are not primarily used to forecast and set in action a company plan.

Question 15

As with a lot of planning,the financial forecast begins with ________ estimates and ________ schedules.

Accepted Answer

Financial forecasting relies heavily on estimates of sales and production schedules. These estimates are used to project revenues and expenses, and ultimately determine the expected profits or losses for the period being forecasted.

Question 16

For June,Rogue River Rafting will have cash receipts of $94,000 and cash disbursements of $75,000.If its beginning cash is $2,000 and its desired reserve is $15,000,what will be its excess in cash for the month?

Accepted Answer

Beginning cash + Cash receipts - Cash disbursements - Desired reserve = Excess in cash

$2,000 + $94,000 - $75,000 - $15,000 = $6,000

Therefore, the excess in cash for the month is $6,000. The correct answer is D.

Question 17

Briefly explain the difference between a USE of cash and a SOURCE of cash.Give examples of each.Briefly explain why managers want to know the uses and sources of cash.

Accepted Answer

The answer of Briefly explain the difference between a USE...

Question 18

Pancake Castle will have cash receipts of $75,000 in June and cash disbursements of $40,000 for this month.If its beginning cash is $8,000 and its desired reserve is $10,000,what will its excess be for April?

Accepted Answer

The excess for April can be calculated by adding the beginning cash to the cash receipts and then subtracting the cash disbursements and the desired reserve. So, $8,000 (beginning cash) + $75,000 (cash receipts) - $40,000 (cash disbursements) - $10,000 (desired reserve) = $33,000.

Question 19

Which of the below is a USE of cash?

Accepted Answer

Retirement of debt involves using cash to pay off loans and bonds, which directly reduces the company's cash balance.

Question 20

Which of the below is a SOURCE of cash?

Accepted Answer

Cash sales refer to the revenue generated from selling goods or services for cash, which directly increases the cash balance of a company.

Quiz 12: Forecasting and Short-Term Financial Planning

One of the functions of a finance manager is ________.

Forecasting entails drawing a financial picture of a company for the ________.

Financial forecasts are seldom right on the money,so to speak,but they do provide a yardstick by which a company can measure ________.

A SOURCE of cash is utility payments.

For the month of March,Rogue Retail will have cash receipts of $165,000 and cash disbursements of $150,000.If its beginning cash is $12,000 and its desired reserve is $20,000,what will be its shortfall or excess in cash for the month?

Pixi Boutique will have cash receipts of $57,000 in December and cash disbursements of $51,000 for this month.If its beginning cash is $12,000 and its desired reserve is $9,000,what will its excess be for December?

In March,The Wonder Emporium will have cash receipts of $107,000 and cash disbursements of $110,000.If its beginning cash is $6,000 and its desired reserve is $5,000,what will be its shortfall in cash for the month?

Northwest Outdoor Store will have cash receipts of $83,000 in December and cash disbursements of $78,000 for this month.If its beginning cash is $3,000 and its desired reserve is $15,000,what will its excess be for December?

A USE of cash is interest payments received.

Short-term decisions are viewed as decisions that have short-term impacts and can be changed or modified at ________.

For a firm,bank loans can be a source of cash and interest payments to the bank can be a use of cash.

Which of the statements below is FALSE?

Which of the statements below is FALSE?

There are two primary tools used to forecast and set in action a company plan.Which of the tools below is one of these?

As with a lot of planning,the financial forecast begins with estimates and schedules.

For June,Rogue River Rafting will have cash receipts of $94,000 and cash disbursements of $75,000.If its beginning cash is $2,000 and its desired reserve is $15,000,what will be its excess in cash for the month?

Briefly explain the difference between a USE of cash and a SOURCE of cash.Give examples of each.Briefly explain why managers want to know the uses and sources of cash.

Pancake Castle will have cash receipts of $75,000 in June and cash disbursements of $40,000 for this month.If its beginning cash is $8,000 and its desired reserve is $10,000,what will its excess be for April?

Which of the below is a USE of cash?

Which of the below is a SOURCE of cash?