Question : 5) In a multinational company, budgeting primarily done to evaluate : 1212117

 

5) In a multinational company, budgeting is primarily done to evaluate the firm’s performance relative to its budgets.

 

Objective 6.A

 

1) The ________ is required to prepare the cash budget of an organization.

A) statement of shareholder’s equity

B) budgeted balance sheet

C) capital expenditures budget

D) budgeted statement of cash flow

 

2) Financial analysts use the projected cash flow statement to ________.

A) determine the tax effect of cash expenses

B) plan for short-term cash investments

C) analyze the impact of non-cash expense on income statement

D) project depreciation expense

3) The cash flow statement includes ________.

A) cash discount on sales

B) cash outflow towards insurance premium

C) sales revenues of the organization

D) interest accrued on an investment

 

4) The cash budget is a schedule of expected cash receipts and disbursements that ________.

A) requires an aging of accounts receivable and accounts payable

B) is a self-liquidating cycle

C) is prepared immediately after the sales forecast

D) predicts the effect on the cash position at given levels of operations

 

Answer the following questions using the information below:

 

The following information pertains to Hepburn Company:

 

MonthSalesPurchases

January$60,000$32,000

February$80,000$40,000

March$100,000$56,000

 

•Cash is collected from customers in the following manner:

Month of sale30%

Month following the sale70%

•40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

•Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred.

•The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

 

5) How much cash will be collected from customers in March?

A) $94,000

B) $86,000

C) $100,000

D) $110,000

6) How much cash will be paid to suppliers in March?

A) $46,400

B) $56,000

C) $88,000

D) $92,000

 

7) How much cash will be disbursed in total in March?

A) $42,000

B) $50,000

C) $88,400

D) $96,400

 

8) What is the ending cash balance for March?

A) ($50,000)

B) $6,000

C) $5,600

D) $6,600

Answer the following questions using the information below:

 

Finmin Company has the following sales budget for the last six months of 2015:

 

July$200,000October$180,000

August  160,000November   200,000

September  200,000December  180,000

 

Sales are immediately due, however the cash collection of sales, historically, has been as follows:

65% of sales collected in the month of sale,

25% of sales collected in the month following the sale,

8% of sales collected in the second month following the sale, and

2% of sales are uncollectible.

 

9) Cash collections for September are ________.

A) $143,000

B) $170,000

C) $186,000

D) $204,000

 

 

 

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