Financial Management

Question 1

Revenue budget

Answer 1

estimated sales; projected during the budget process

Question 2

Operational budget

Answer 2

guides day-to-day ops; foundation of planning and control; include revenue and costs

Question 3

Capital budget

Answer 3

foundation for growth, repairs

Question 4

Cash flow budget

Answer 4

estimated flow of cash in and out during a given time period

Question 5

Master budget

Answer 5

operational, capital, revenue, cash flow budgets; estimated profit provided as well

Question 6

Incremental budget

Answer 6

based on previous year’s budget adjusted for inflation

Question 7

Performance budget

Answer 7

preference is given to those projections for generations of sales

Question 8

Zero-based budget

Answer 8

made each year; funds allocated by justification to continue activities or beginning new activities

Question 9

Revenue

Answer 9

money received for the sale of a good

Question 10

Direct costs/expense

Answer 10

costs associated with a specific department, product, service

Question 11

Indirect costs/expense

Answer 11

costs that CANNOT be associated with a specific department, product, service

Question 12

Capital expenditures

Answer 12

Major purchases/replacements, improvements, expansions

Question 13

Profit margin

Answer 13

revenue less all costs of a specified good or service

Profit margin on sales = net income/sales

Question 14

ROI

Answer 14

The amount received in excess of the original investment. Usually expressed as a % on an annual/yearly basis. Possible to have a negative ROI. May be expressed as interest, gain/loss, net income/loss. The original amount invested may also be referred to as an asset, investment, capital, or principal.

Question 15

Financial Statements

Answer 15

aid to determine financial condition and profitability

Question 16

Balance sheet

Answer 16

statement of assists, liabilities, and equity

Question 17

Income statement

Answer 17

revenue and income less expenses for the period arriving at net income or loss

Question 18

Cost benefit studies

Answer 18

evaluate whether different options would return better results financially or operationally

Question 19

Cost effectiveness

Answer 19

cost vs. results. Desired outcome often not measured in dollars. Assists in determining a specific predetermined goal. Popular in public programs.

Question 20

Cost benefit analysis

Answer 20

effort, time, expense vs. benefits. Performance measured in monetary terms.

Question 21

Productivity studies

Answer 21

evaluated quantitatively; based on input vs output

Question 22

Net income

Answer 22

Revenue - Expenses

Question 23

Revenue

Answer 23

Amounts received from customers for goods or services rendered.

Question 24

Total revenue

Answer 24

Price x quantity sold

Question 25

Expenses

Answer 25

the amounts incurred for producing revenue

Question 26

Goods available for sale

Answer 26

beginning inventory + purchases

Question 27

cost of goods sold

Answer 27

beginning inventory + Purchases - ending inventory

Question 28

Gross profit

Answer 28

sales revenue - cost of goods sold

Question 29

Prime cost

Answer 29

raw material + Labor

Question 30

Fixed cost

Answer 30

Constant regardless of level of production

Question 31

Variable cost

Answer 31

changes with the level of production

Question 32

LIFO

Answer 32

LAST IN FIRST OUT

Question 33

FIFO

Answer 33

FIRST IN FIRST OUT