 . What is budgeting?

A plan made in advance regarding the expenditure of money based on available

income.
 What is the purpose of a budget?
Estimating income and expenses
 What is/are the objective/s of Proforma Financial Statements?
All of the above.
 Financial planning is a process to ensure that ________________.
the company is liquid and has paid all its investors’ dividends.
 A plan to be effective should be created using S.M.A.R.T. philosophy. What do S.M.A.R.T.
mean?
Specific, measurable, assignable, realistic, time-related
 A _______is a type of financial intermediary that pools Savings of individuals and makes
them available to business and government users. Funds are obtained through the sale of
shares.
mutual fund
 Most businesses raise money by selling their securities in _____________.
a public offering.
 Which of the following is not a service provided by financial institutions?
buying the businesses of customers
 Government usually_______________________.
is a net demander of funds.
 By definition, the money market involves the buying and selling of ______.
short-term funds
 Which of the following statements about budgeting is incorrect?
Budgets motivate staff.
 Which of the following is normally prepared first?
Sales Budget
 What is a sales budget?
A plan for how much money should be made in a given period.
 Why many small businesses do not use budget?
All of the above.
 Which of the following is NOT a benefit of budgeting?
It is a source of motivation
 This financial statement reports a Operations’ sales, expenses, profits Or losses for a period
of time.
Income Statement
 An integral part of the planning Process that makes future predictions regarding sales
trends.
Forecasting
 It is a detailed schedule showing the
Sales Budget
 It is a plan that indicates an operation’s financial objectives.
Budgeting
 It calculates the number of units of products that must be produced.
Production Budget
 Why are budgets useful in the planning activity of an organization?
 Buy the things I need

 What is the formula for computing production budget?

Expected Sales in Units + Planned Ending Inventory Units – Beginning Inventory in Units

Year 1 Year 2 Year 3

Sales (in unit) 5,000 10,000 15,000

Beginning Inventory 1,500 2,500 4,000
Ending Inventory 3,000 5,000 7,000
Production Budget 6,500 12,500 18,000

SALES BUDGET

FORMULA QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4

Forecasted unit sales 5,500 6,000 7,000 8,000
X Per unit 10 10 12 12
Total gross sales 55,000 60,000 84,000 96,000

 Which of the following is true about cash management?

The primary objective in cash management is to keep the investment in cash as low as
possible while still operating efficiently and effectively.
 The speculative motive of holding cash refers to:
Avail of any future investment opportunity
 It is called liquid assets which include cash and savings that can be converted to cash quickly
and easily.
Current Assets
 Net Working Capital is defined as:
Current assets minus current liabilities
 Inventory management refers to:
management and control of inventory
 What is budgeting?
A plan made in advance regarding the expenditure of money based on available income
 Financial planning is a process to ensure that ________________.
the company is liquid and has paid all its investors’ dividends.
 What is the formula for computing production budget?
Expected Sales in Units + Planned Ending Inventory Units – Beginning Inventory in Units
 It is an integral part of the planning process that makes future predictions
regarding sales trends.
Forecasting
 It is a detailed schedule showing the expected sales for the budget period.
Sales Budget
 What is a Working capital management?
It is the financing and management of the firm’s current assets.
 What is the transactional motive of holding cash?
To keep a cash reserve for purchasing goods and services to balance out the cash inflows
and outflows.
 Below are all components of working capital except:
 Notes Payable

 In what order will a company’s current assets appear on a classified balance sheet?
Order of Liquidity
 Which of the following would not be important in examining the firm's buildup of accounts
receivable, cash, and current assets:
Income Statement
 . What is the advantage of using short-term funds?
Easily obtained
 Which of the following would not be financed from working capital?
. A new personal computer unit for the office
 . Which of the following statements is not true as regards to matching strategy?
Permanent current assets should be financed with permanent working capital.
 Which of the following working capital strategies is the most aggressive?
greater use of short-term finance and minimizing net short-term asset.
 Inventories can be classified into:
Raw material, work-in progress, and finished goods
 If a company has current assets of Php 530,000 and current liabilities of Php 300,000 the
amount of its working capital is _______________________.
Working Capital = P230,000
 Ninety percent (90%) of Dove Bird Seed’s total sales of Php 600,000 is on credit. If its year-
end receivables turnover is 5, the average collection period (based on a 365-day year) is
Days of Receivables = 73 days
 Using the data provided on No. 2, its year-end receivable is __________________.
Year-end receivable = Php108,000
 Paula owns and operates an apparel store. Examine her current assets and liabilities below
and compute her net working capital. _______ Cash Php 10,000 Accounts Payable Php 7,500
Accounts Receivable 5,000 Accrued Expense 2,500 Inventory 15,000 Other Trade Debt 5,000
Total Current Assets Php 30,000
Total Current Liabilities Php 15,000
Net working capital = Php15,000
 The days’ sales in inventory is 73. The cost of goods sold is 720,000. The net sales are Php
1,020,000, The beginning inventory was 82,000. What is the ending inventory? _____
Ending Inventory = Php 144,000