QUESTION 22Which of the following are reasons to generate a pro forma cash budget on amonthly basis?a. An income statement indicates a profit but the budget may indicate a loss.b. A business can monitor the actual cash on hand.c. Sales are recognized as income when the sale is made.d. All of the above.

Correct option with proper explanation are as follows

Answered: QUESTION 22 Which of the following are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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true and false a. Developing a budget is a critical step in planning any economic activity. This is true for businesses, for governmental agencies, and for individuals. (……….) b. The sales budget shows the projected sales in units and the total expected sales revenue. (……….)
Why is the cash budget regarded as a primary tool in short-run financial planning? Discuss.
LB Enterprises (LB) is preparing its budget for the first quarter of 2019. LB's balance sheet as of December 31, 2018 is as follows: Assets Liabilities Cash $5,000 Accounts Payable $9500 Accounts Recievable 28,000 Inventories Direct Materials 8,100 Finished Goods (500 Units) 16,870 Stockholders Equity Equipment - gross 45,000 Accumulated depreciation 15.000 Common Stock $15,000 Net Equipment 30,000 Retained Earnings 63,470 Total Assets $87,970 Total Liabilities and $87,960 Equity LB sells one product for $45/unit. The Company forecasts that it will sell 2,000; 1,500; 1,600; and 1,700 units in January, February, March and April, respectively. • Sales to customers are all on credit. 40% of the cash for these sales is collected in the month of the sale and the remaining 60% is collected in the following month. LB wants finished goods inventory equal to 25% of the next month's sales on hand at the end of each month. LB wants direct materials equal to 75% of the current month's production…
2. State whether the following sentences are TRUE or FALSE ASTARINS # Statements 1 The production budget is typically prepared prior to the sales budget. One benefit of budgeting is that it coordinates the activities of the entire organization. The master budget is a network consisting of many separate budgets that are interdependent. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known. 5 A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product. 2 3 4 TRUE or FALSE 3. Which of the following represents the normal sequence in which the indicated budgets are prepared? A. Direct Materials, Cash, Sales B. Production, Cash, Income Statement C. Sales, Balance Sheet, Direct Labor D. Production, Manufacturing Overhead, Sales 1280 4. Which of the following represents the correct order in which the indicated budget documents…
Explain why it would be beneficial to prepare a cash forecast, or a cash budget, for an organization. (4 sentences)
Regarding Budgets, which of the following statements is true? a. A budget is a business plan for the short term. O b. A periodic budget is prepared for a particular period of time. O c. Budgets are based on forecasts. However, the performance of a manager should be compared to a target that reflects the actual environment. O d. All the answers are true.
Haha
Bank loan officers would find which of the following budgets to be one of the most important in determining whether or not to give a company a loan? Sales budget O Production budget O Budgeted income statement O Budgeted balance sheet O Cash budget
which one is correct please confirm? QUESTION 16 When preparing a cash budget, once a firm has estimated its cash receipts the firm must ____________. a. pay dividends to its stockholders b. determine the desired cash balance c. plan a pro forma statement d. schedule disbursements
Question 4:Budgeting: The various activities within a company should be coordinated bythe preparation of plans and actions for future periods. These detailed plans are usually referred to as budgets. Discuss the multiple functions of budgets
4. The difference between the budgeted amounts of Sales and Cash Received for sales is equal to the budgeted change in: a. Cash b. Accounts Receivable c. Accounts Payable d. Retained Earnings e. None of the Above
Cash management involves keeping an eye on the business's cash balance to ensure that A.the business is generating a profit B.all cash payments are included in the purchases budget C.there is enough cash on hand to pay for planned operations during the current period D.all cash receipts are included in the sales budget

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