Budgeting & Model Building Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Liz is getting a loan to launch a new line of products. Why would a lender ask for a pro forma financial statement?

Question 2 2. Financial planning allows a company to do which of the following?

Question 3 3. What is a pro forma financial statement?

Question 4 4. What is the plug in a financial planning model?

Question 5 5. A financial planning model is most useful to a company because it helps executives do which of the following?

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Question 6 6. XYZ Bicycles is a relatively new company and have been doing well financially. Because they are so new, they have a decent amount of debt in the company. Recently their sales have been skyrocketing, and just last month became cash flow positive. They do not have a huge amount of cash reserves. Assume they do not want to simply hold the money in reserve, what should XYZ Bicycles do with their cash flow?

Question 7 7. What is a dividend?

Question 8 8. When would a company be smart to focus solely on increasing cash flow?

Question 9 9. What are accounts receivable?

Question 10 10. When is a company most encouraged to acquire another firm?

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Question 11 11. You work as an accountant for a small business. The owner of the company has asked you to give her the operating cash flow for the company for the fiscal quarter that just ended. Upon review of the relevant documents, you determine that the company's earnings before taxes and interest for the quarter was $230,000, it depreciated $5,000 worth of equipment and has paid estimated taxes of $20,000. There was no amortization. What is the operating cash flow for the last quarter?

Question 12 12. What is the best explanation of cash flow?

Question 13 13. What's the difference between negative cash flow and positive cash flow?

Question 14 14. As the CFO of Acme Machinery, Kay is concerned that their cash flow is being impacted by the amount of money they are spending on expensive pieces of equipment. Should Kay look at their free cash flow or net cash flow, and why?

Question 15 15. On which financial statement is cash flow reported?

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Question 16 16. In general, which of the following budgets is based upon other budgets and created last?

Question 17 17. Carol was asked by her boss to develop a master budget for the company she works for, ''The Big Spoon.'' She doesn't know where to start with this project. Which budget would you suggest she start with, and why?

Question 18 18. Which one of the following categories is NOT part of the master budget?

Question 19 19. The cash budget is part of which main category of the master budget?

Question 20 20. Operating budgets do NOT contain of which of the following?

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Question 21 21.

What is happening to this company's variance from quarter to quarter?

QuarterVariance
Q1-$300
Q2-$800
Q3-$1200

Question 22 22. Ideally, what do you want variance analysis modeling to demonstrate?

Question 23 23. Why do companies want to keep track of trends in their variance in accounting?

Question 24 24. What is variance in accounting?

Question 25 25. What is a favorable variance in accounting?

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Question 26 26. Why would we calculate price and volume differences when analyzing our results?

Question 27 27. How do we calculate variances to budget?

Question 28 28. What is a price volume analysis?

Question 29 29. Why do we calculate variances between actual activity and the budget?

Question 30 30. What are variances in budgets?

Budgeting & Model Building Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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