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Financial Forecasting Essentials

This document contains 10 multiple choice questions about financial forecasting and cash budgeting. It states that projecting sales is not the beginning step in financial forecasting, that rapidly growing firms may face greater risk of cash shortages, and that depreciation expense and projecting receivables collection are important considerations for constructing an accurate cash budget.

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Fria Mae Aycardo Abellano
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64 views1 page

Financial Forecasting Essentials

This document contains 10 multiple choice questions about financial forecasting and cash budgeting. It states that projecting sales is not the beginning step in financial forecasting, that rapidly growing firms may face greater risk of cash shortages, and that depreciation expense and projecting receivables collection are important considerations for constructing an accurate cash budget.

Uploaded by

Fria Mae Aycardo Abellano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

 Activity 2.

FALSE 1. The beginning step in financial forecasting is the


projection of sales.
TRUE 2. A rapidly growing firm may be more subject to a shortage
of funds than a declining firm.
TRUE 3. A cash budget is a historical financial statement
TRUE 4. The Percent-of-Sales Method is a shortcut approach to
constructing a pro forma income statement.
FALSE 5. A firm that engages in financial forecasting is assured
that the projected events will occur.
TRUE 6. Depreciation Expense is a primary consideration in
constructing a cash budget.
TRUE 7. A Corporation may experience cash shortages during an
accounting period even though it earns high profits.
TRUE 8. Financial forecasting is required by those external to
the firm as well as the management.
TRUE 9. A substantial portion of the increase in assets
necessitated by rising sales may be automatically financed
through accounts payable.
TRUE 10. A cash budget requires projection of receivables
collection as well as cash sales.

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