Question 1

"Pro forma" accounting statements as used in business financial planning means:
A)actual accounting of income and expenses
B)actual accounting of assets and liabilities
C)a statement of anticipated costs and revenues or change in assets,liabilities and equity based upon prior (operating)financial performance.
D)none of the above

Accepted Answer

Pro forma means "in name" only.It is a plan for the future,but is based upon past and current financial records.It is a picture of planned income and expenditures as well as changes in the assets,liabilities and equity positions of the firm into the next/future period.

Question 2

To fund a franchise business,most franchisee use:
A)a single source of funding
B)multiple sources of funding
C)already have sufficient liquidity to fund the startup and need no additional funding
D)none of the above

Accepted Answer

Most franchisees need multiple sources of funding

Question 3

In financial planning with the franchised business,the most basic and essential variable of the financial planning tools is the:
A)inventory schedule
B)sales forecast
C)pro forma balance sheet
D)econometric models for forecasting liabilities

Accepted Answer

Sales forecast which is an extrapolation of past sales set in terms of the general economic conditions confronting the local economy that the franchise system operates within

Question 4

The income statement is used to plan:
A)liquidity for the firm
B)profitability for the firm
C)anticipated costs of operation
D)asset utilization for the business

Accepted Answer

Profitability.See chapter section on "pro forma balance sheet" discussion.

Question 5

All of the current assets of the firm,or more specifically,current assets minus current liabilities equals:
A)cash discounts
B)marketable securities
C)inventory management
D)working capital

Accepted Answer

Working capital.See discussion near beginning of the chapter.

Question 6

Often considered the most critical financial component of working capital is
A)marketable securities
B)inventory management and recovery
C)cash
D)accounts receivable

Accepted Answer

Cash is most often considered the most critical component of working capital

Question 7

The cash flow statement is used to plan:
A)liquidity for the firm
B)profitability for the firm
C)anticipated costs of operation
D)asset utilization for the business

Accepted Answer

Liquidity.See chapter section on "pro forma balance sheet" discussion.

Question 8

Which one of the following is Not a common method of borrowing funds in the short-term when considering the rate of interest to be paid:
A)percentage-of-sales method
B)simple
C)add-on
D)discount

Accepted Answer

Percentage-of-sales method is not a means of calculating rate of interest paid on short-term obligations.The other three methods are common methods of determining actual interest paid on short-term loans.

Question 9

Short-term obligations created by the franchisee in buying supplies,materials or services associated with running the business are referred to as:
A)inventory management
B)accounts receivable
C)accounts payable
D)working capital

Accepted Answer

Accounts payable.See discussion under "current liability management"

Question 10

Estimation of sales and other income for a period and cash disbursements to be paid in the same period identifies the components of the:
A)balance sheet
B)income statement
C)cash flow statement
D)none of the above.

Accepted Answer

Cash flow statement, as discussed in chapter under "financial planning

Quiz 11: Financial Management and Fiscal Planning Tools and Techniques

"Pro forma" accounting statements as used in business financial planning means:

To fund a franchise business,most franchisee use:

In financial planning with the franchised business,the most basic and essential variable of the financial planning tools is the:

The income statement is used to plan:

All of the current assets of the firm,or more specifically,current assets minus current liabilities equals:

Often considered the most critical financial component of working capital is

The cash flow statement is used to plan:

Which one of the following is Not a common method of borrowing funds in the short-term when considering the rate of interest to be paid:

Short-term obligations created by the franchisee in buying supplies,materials or services associated with running the business are referred to as:

Estimation of sales and other income for a period and cash disbursements to be paid in the same period identifies the components of the: