Tag: budgeting

Quizzes (3) Questions (108)

Questions Related to budgeting

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Arrange the following steps involved in capital budgeting in order of their occurrence:
i. Project selection
ii. Project appraisal
iii. Project generation
iv.Follow up
v. Project execution

  1. $ii, iii, i, v, iv$
  2. $iii, ii, i, v, iv$
  3. $i, iii, ii, v, iv$
  4. $i, ii, iii, v, iv$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Steps involved in capital budgeting in order of their occurrence:-

1. Identify and evaluate potential opportunities
2.Project appraisal

3.Project selection
4.Project execution
5.Follow up

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Incremental cash flows in relation to capital budgeting decisions refer to the ____________.

  1. Cash flows which are increasing over a period of time

  2. Incremental change in cash flows if the project is extended one year beyond its life period

  3. Cash flows which are directly attributable to the investment

  4. Difference between cash inflow streams and the initial outflow

  5. Comparision between any two cash outflows in a project's life period
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Incremental cash flows are the net additional cash flows generated by a company by undertaking a project. Capital budgeting decisions are based on comparison of a project's initial investment outlay to the future incremental cash flows of the project and its terminal cash flow.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Which of the following is not considered while preparing cash budget?

  1. Accrual Principle

  2. Difference in Capital and Revenue items

  3. Conservation Principle

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cash budget is an estimation of the cash inflows and outflows for business over a specific period of time. The budget is used to assess whether the entity has sufficient cash to operate. Companies use sales and production forecasts to create a cash budget, along with assumptions about necessary spending and accounts receivable. If a company does not have enough liquidity to operate, it must raise capital by issuing stock or by taking a debt.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

A budget is frequently prepared to combine all other budgets in a summary form. It is known as _____________.

  1. Sales Budget

  2. Purchase Budget

  3. Cash Budget

  4. Master Budget
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The master budget is the sum total of all the divisional budgets that is prepared by all the divisions. Further, it also includes the financial planning, cash-flow forecast and budgeted profit and loss account and balance sheet of the organization. 


Master Budget is the summary of the divisional budget.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Sum of discounted cash flows is best defined as _____________.

  1. technical equity

  2. defined future value

  3. project net present value

  4. equity net present value
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The sum of discounted cash flows for a project, minus the initial investment, is the definition of the Net Present Value (NPV).

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash Flow Statement explains the reason on surplus or deficit of cash.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Cash Flow Statement provides a detailed breakdown of the sources and uses of cash, explaining why the cash balance increased or decreased over a period.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash Management and Insurance are chief function of the ____________.

  1. Tax Manager

  2. Controller

  3. Treasurer

  4. Accountant

  5. Finance Manager
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The treasurer of an organization deals with the liquid assets of the firm and his responsibilities include cash management and insurance of assets.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

Cash and Cash Equivalent includes _____________________.

  1. Cash on hand and bank balance.

  2. Marketable Securities.

  3. Short-term investments.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Cash and cash equivalents include highly liquid assets such as cash on hand, bank balances, marketable securities, and short-term investments that can be converted to cash quickly.

Multiple choice book keeping and accountancy statement of changes in financial position meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement budgeting

The financial ratio (the best single predictor) that is used in the Beavers Model to predict the failure of a company is the _____________.

  1. Debt-equity ratio

  2. Cash flow to total debt ratio

  3. Price earnings ratio

  4. Return on investment

  5. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Beaver's Model for bankruptcy prediction identified the cash flow to total debt ratio as the most significant single predictor of corporate failure.