Deck 24: Cash Budgeting

Question 1

The cash budget includes​

A) ​cash receipts and current liabilities
B) disbursements and depreciation expense
C) ​cash receipts and disbursements
D) ​assets and equity

Answer 1

​cash receipts and disbursements

Question 2

A cash budget seeks to determine estimated costs and revenues in order to forecast earnings.​

Answer 2

False

Question 3

​The cash budget is constructed using

A) ​regression analysis
B) ​the percent of sales
C) ​revenues and expenses
D) ​receipts and disbursements

Answer 3

​receipts and disbursements

Question 4

Accounts payable are excluding from the cash budget. span>​

Question 5

Collecting accounts receivable are including when constructing a cash budget.​

Question 6

​The cash budget excludes

A) ​wages and salaries
B) ​interest received
C) ​accruals
D) ​mortgage payments

Question 7

Cash outflows that are not expenses (e.g., mortgage payments) are excluded from the cash budget.​

Question 8

The bottom line of a cash budget shows the firm's excess cash or need for external finance.​

Question 9

​The cash budget includes
1) tax payments
2) collection of accounts receivab
3) principal repayments​

A)1 and 2​
B)​1 and 3
C)​2 and 3
D)​1, 2, and 3

Question 10

Depreciation is excluded from the cash budget.​

Question 11

Prepare a monthly cash budget for a firm given the following information.​ $\begin{array}{llc}\text { Sales: } \quad \text { June } & \$ 200,000 \\\text { July } & 200,000 \\\text { August } & 200,000 \\\text { September } & 300,000 \\\text { October } & 500,000 \\\text { November } & 200,000\end{array}$ ​
70% of the sales are for credit and are collected one month after the sale.Other receipts: $50,000 in October
Variable disbursements: 60% of sales each month
Other disbursements: $10,000 a month
$80,000 for taxes in August
$400,000 for debt repayment in November
Beginning cash: $50,000
Desired cash: $10,000

Question 12

​A cash budget differs from an income statement because the cash budget
1) does not determine profits or losses
2) excludes depreciation expense
3) uses disbursements and not expenses

A)​1 and 2
B)​1 and 3
C)​2 and 3
D)​1, 2, and 3

Question 13

A cash budget differs from a balance sheetm because the cash budget
1)does not enumerate the firm's assets
2)does not enumerate the firm's liabilities
3)does not indicate the firm's retained earnings

A)​1 and 2
B)​1 and 3
C)​2 and 3
D)​1, 2, and 3

Question 14

The cash budget excludes​

A) ​receipts
B) ​disbursements
C) ​tax payments
D) ​depreciation

Question 15

A cash budget enumerates receipts and disbursements.​

Question 16

​Given the following information, construct the firm's cash budget for the given months. a. 75 percent of sales are for credit, and collections occur after thirty days.
b. A $\$ 100,000$ Treasury bill matures in March.
c. Monthly fixed disbursements are $\$ 14,000$ .
d. Variable disbursements are 62 percent of sales and occur one month prior to sales.
e. A tax payment of $\$ 13,500$ is due in February.
f. The initial cash is $\$ 20,000$ .
g. The minimum required cash balance is $\$ 5,000$ .
h. Variable cash disbursements are given for April.
$\begin{array} { l c } & \text { January } \\ \text { Sales } & - \\ \text { Cash sales } & - \\ \text { Collections } & - \\ \text { Other receipts } & - \\ \text { Total cash receipts } & - - \end{array}$
$\begin{array} { l l } \text { Variable } & 30,000 \end{array}$
disbursements Fixed di sbursements
Fixed disbursements
Total cash disbursements
Net change during the month
Beginning cash
Ending cash
Required cash
Excess cash to invest
Cash borrowed

Question 17

A firm's earnings are not determined by the cash budget but are determined by the income statement.​

Question 18

Increasing the speed with which receivables are collected has no impact on the cash budget.​