pre fi

Question 1

is very much related to another management function, controlling.

Answer 1

Planning

Question 2

is about setting the
goals of the organization and identifying ways to achieve them.

Answer 2

Management planning

Question 3

are in form of budgets and projected
financial statements.

Answer 3

Quantified plans

Question 4

Steps in Financial Planning

Answer 4

set goals

Identify resources

Identify goal-related tasks

Establish responsibility centers for accountability and timeline

Establish an evaluation system for monitoring and controlling.

Determine contingency plans.

Question 5

is a description in quantitative usually monetary terms of desired future result.

Answer 5

Budget

Question 6

• is a prediction of the firm’s sales over a specific period, based on external and internal information.

Answer 6

Sales Budget

Question 7

• is a financial planning related to the units of production that the management think that the
  business should produce in the upcoming period to match the estimated sales quantity

Answer 7

Production Budget

Question 8

• is a statement of the firm that has planned inflows and outflows of cash.

Answer 8

Cash budget

Question 9

is a tool of the company to set an overall goal of what the company’s performance and
position will be for and as of the end of the year.

Answer 9

Projected financial statements

Question 10

It is a process of closely monitoring of in and out of cash in the business.

Answer 10

cash flow statement

Question 11

refers to company’s investment in short term asset such as cash, inventory, short-term marketable
securities, and account receivable.

Answer 11

Working capital

Question 12

capital refers to the difference between the firm’s current assets and current liabilities.

Answer 12

Net Working

Question 13

specifically refers to the efficient management of the firm’s current assets (cash,
receivables, and inventory) and current liabilities (short-term payables).

Answer 13

Working Capital Management

Question 14

involves the maintenance of a cash and marketable securities investment level, which will enable
the company to meet its cash requirements and at the same time optimize the income on idle funds.

Answer 14

cash management

Question 15

• cash needed to facilitate the normal transactions of the business, that is, to carry out its
  purchases and sales activities.

Answer 15

Transaction Motive

Question 16

• Cash may held beyond its normal operating requirement level in order to provide for a
  buffer against contingencies such as unexpected slow-down in accounts receivable collection,

Answer 16

Precautionary Motive

Question 17

• cash held ready for profit making or investment opportunities that may come up such as a
  block of raw materials inventory offered at discounted prices or a merger proposal.

Answer 17

Speculative Motive

Question 18

-A company may be required by a bank to maintain a certain compensating balance in its
demand deposit account as a condition of a loan extended to it.

Answer 18

Contractual Motive

Question 19

• A firm operating cycle begins from the time goods for sale manufactured to the eventual
  collection of cash from the sale of these goods.

Answer 19

Cash Conversion Cycle

Question 20

• The objective in managing inventory is to convert it as quickly as possible to cash without
  losing sales due to stock outs.

Answer 20

Inventory Management

Question 21

– these are purchased materials not yet put into production

Answer 21

Raw materials

Question 22

– these are goods and labor put into production but not finished

Answer 22

Work in process

Question 23

– these are goods put into production and finished. These are ready to be sold.

Answer 23

Finished goods

Question 24

• represents assets of the entity that expected to be collected and thus converted to
  cash.

Answer 24

Accounts Receivable Management

Question 25

• Another used in granting credit to customers is through credit scoring.

Answer 25

Credit Scoring