Question 1

For May, Rogue Rafting will have cash receipts of $97,000 and cash disbursements of $108,000. If its beginning cash is $5,000 and its reserves are $2,000, what will be its shortfall in cash for the month?

Accepted Answer

Cash shortfall = beginning cash + cash receipts - cash disbursements - reserves
= $5,000 + $97,000 - $108,000 - $2,000
= -$8,000
Therefore, the company has a cash shortfall of $8,000 for the month of May. Choice C is correct.

Question 2

Which of the statements below is FALSE?

Accepted Answer

The statement that "the cash-management process will usually start with inventory forecasting" is false. Cash management will typically start with a cash forecast, as this is the analytical tool used to estimate the future timing of cash inflows and project potential shortfalls or excess. While inventory forecasting is important in cash management, it comes after the cash forecast.

Question 3

Which of the statements below is FALSE?

Accepted Answer

Determining the number of manufacturing facilities is not necessarily a short-term decision. It could potentially have long-term impacts and involve significant costs and information gathering.

Question 4

Which of the below is a SOURCE of cash?

Accepted Answer

Cash sales involve customers paying in cash for goods or services, which results in an increase in cash for the business.

Question 5

We start the process of building a cash forecast with predicting the cash inflow from future sales. This is called ________.

Accepted Answer

The process of predicting cash inflow from future sales is called a sales forecast. This forecast is then used as a basis for creating a cash forecast, which predicts the company's future cash inflows and outflows. While revenue and monetary forecasts are related to cash flow, they are not specific to predicting cash inflows from sales.

Question 6

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 7

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 8

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 9

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 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 meant to have short-term impacts and can be easily adjusted at relatively low costs. The other choices are not accurate descriptions of short-term decisions.

Question 11

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

Accepted Answer

Financial forecast starts with estimating sales and production schedules, as they are directly related to financial performance and revenue generation. Dividends and profits are dependent on sales and production, and therefore are not the starting point for financial forecasting.

Question 12

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 for forecasting and setting in action a company plan. These statements project the company's financial performance based on anticipated future events, such as an increase in sales or a change in costs. This allows the company to plan and make strategic decisions based on these projections. While other financial statements such as income statements and retained earnings are important, they do not have the same predictive value as pro forma statements. Profit budgets are also useful for planning, but they are not in the same category as forecasting tools.

Question 13

NorWest Outdoor Store will have cash receipts of $47,000 in December and cash disbursements of $41,000 for this month. If its beginning cash is $7,000 and its reserves are $4,000, what will its excess be for December?

Accepted Answer

To calculate the excess, we need to subtract the total cash disbursements from the beginning cash plus cash receipts plus reserves. 
Excess = (Beginning cash + Cash receipts + Reserves) - Cash disbursements 
Excess = ($7,000 + $47,000 + $4,000) - $41,000 
Excess = $58,000 - $41,000 
Excess = $17,000

Therefore, the excess for December is $9,000.

Question 14

For March, Heavenly Hotel will have cash receipts of $365,000 and cash disbursements of $370,000. If its beginning cash is $4,000 and its reserves are $3,000, what will be its shortfall in cash for the month?

Accepted Answer

The answer of For March, Heavenly Hotel will have cash...

Question 15

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 can provide a firm with cash, which is a source of funding. However, the interest payments on the loan represent a use of cash for the firm, as they are required to pay the bank for the use of their money.

Question 16

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 typically short-term projections of a company's financial performance, so they can be used to measure the company's adherence to or deviation from its short-term plan. While they may provide insights into past adherence and deviation as well, their primary purpose is to guide decision-making in the immediate future.

Question 17

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

Accepted Answer

Forecasting can be done for any period of time, whether it is for a year, month, or quarter. Therefore, the best answer is D, which includes all of these time frames.

Question 18

Rogers Automotive will have cash receipt of $80,000 in December and cash disbursements in December of $70,000. If its beginning cash is $4,000 and its reserves are $15,000, what will Rogers' cash situation be at the end of December?

Accepted Answer

The answer of Rogers Automotive will have cash receipt of...

Question 19

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 20

Supermarket Deluxe in Omaha will have cash receipts of $35,000 in April and cash disbursements of $30,000 for this month. If its beginning cash is $5,000 and its reserves are $2,000, what will its excess be for April?

Accepted Answer

The answer of Supermarket Deluxe in Omaha will have cash...

Quiz 12: Forecasting and Short-Term Financial Planning

For May, Rogue Rafting will have cash receipts of $97,000 and cash disbursements of $108,000. If its beginning cash is $5,000 and its reserves are $2,000, what will be its shortfall in cash for the month?

Which of the statements below is FALSE?

Which of the statements below is FALSE?

Which of the below is a SOURCE of cash?

We start the process of building a cash forecast with predicting the cash inflow from future sales. This is called ________.

A SOURCE of cash is utility payments.

A USE of cash is interest payments received.

One of the functions of a finance manager is ________.

Which of the below is a USE of cash?

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

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

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

NorWest Outdoor Store will have cash receipts of $47,000 in December and cash disbursements of $41,000 for this month. If its beginning cash is $7,000 and its reserves are $4,000, what will its excess be for December?

For March, Heavenly Hotel will have cash receipts of $365,000 and cash disbursements of $370,000. If its beginning cash is $4,000 and its reserves are $3,000, what will be its shortfall in cash for the month?

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

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

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

Rogers Automotive will have cash receipt of $80,000 in December and cash disbursements in December of $70,000. If its beginning cash is $4,000 and its reserves are $15,000, what will Rogers' cash situation be at the end of December?

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.

Supermarket Deluxe in Omaha will have cash receipts of $35,000 in April and cash disbursements of $30,000 for this month. If its beginning cash is $5,000 and its reserves are $2,000, what will its excess be for April?