#1
Which of the following is a characteristic of a cash budget?
It estimates future cash inflows and outflows.
ExplanationA cash budget forecasts future cash movements.
#2
What is the primary purpose of preparing a budget?
To forecast future financial performance
ExplanationBudgets project future financial outcomes.
#3
What is the primary objective of cash flow analysis in managerial accounting?
To assess the liquidity position of the business
ExplanationCash flow analysis evaluates liquidity.
#4
Which of the following budgets focuses on planned expenditures for acquiring long-term assets?
Capital expenditure budget
ExplanationBudget for long-term asset purchases.
#5
What is the purpose of a cash budget in managerial accounting?
To forecast future cash inflows and outflows
ExplanationForecasts future cash movements.
#6
Which of the following is NOT typically included in a cash flow statement?
Accounts receivable
ExplanationAccounts receivable aren't part of cash flow.
#7
What is the formula to calculate cash flow from operations?
(Net income + Non-cash expenses) - Changes in working capital
ExplanationCash flow from operations formula.
#8
What does a flexible budget do that a static budget does not?
It adjusts budgeted amounts based on actual activity levels.
ExplanationFlexibility based on actual activities.
#9
What is the formula for calculating the payback period of an investment?
Initial investment / Net cash flow
ExplanationPayback period calculation formula.
#10
What does the cash ratio measure?
The ability of a company to pay its current liabilities with its most liquid assets
ExplanationMeasures liquidity against current liabilities.
#11
In a budgeted income statement, which of the following is subtracted from sales revenue to calculate gross profit?
Cost of goods sold
ExplanationGross profit calculation in budgeted income.
#12
What does the cash conversion cycle measure?
The time it takes to pay suppliers and collect accounts receivable
ExplanationMeasures supplier payment and receivables collection time.
#13
What is the formula to calculate free cash flow?
Operating cash flow - Capital expenditures
ExplanationFree cash flow calculation formula.
#14
Which of the following is included in the cash flow from operating activities section of a cash flow statement?
Cash collected from customers.
ExplanationCustomer cash collection is part of operating activities.
#15
What is the formula to calculate operating cash flow?
(Net income + Non-cash expenses) - Changes in working capital
ExplanationOperating cash flow formula.