M6 Budgeting: Part 2

Question 1

3 Major sections of cash budgets

Answer 1

1) Cash Available
2) Cash disbursements
3) Financing

Question 2

Cash budget format/formula

Answer 2

Beginning Cash
+Cash collections from sales
(Cash disbursements for purchases and op exp)
=Computed ending cash
(Cash requirements to sustain operations)
(Working Capital loans to maintain cash requirements)

Question 3

What is the main reason for preparing a cash budget

Answer 3

to anticipate cash flows so that excess cash can be invested and to minimize the need for interim financing

Question 4

The cash receipts budgets would include loan what?

Answer 4

PROCEEDS

Question 5

What is normally the last pro forma statement prepared?

Answer 5

Statement of cash flows

Question 6

Which budget provides information for preparation of the owner’s equity section of a budgeted balance sheet?

Answer 6

Budgeted income statement

Question 7

The cash budget must be prepared before you can complete which budget?

Answer 7

Forecasted balance sheet

Question 8

Which budget is NOT an operating/financial budget?

Answer 8

Capital budget