Mgmt 3850 Chapter 12 Homework Questions And Answers | Latest Guide

MGMT 3850 CHAPTER 12 HOMEWORK QUESTIONS AND ANSWERS Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough) Chapter 12 Managing Cash Flow 1) Solid cash management enables a business owner to: A) adequately meet the cash demands of the business. B) avoid retaining unnecessarily large cash balances. C) stretch the profit-generating power of each dollar the business owns. D) All of the above 2) ________ is the most important, yet least productive, asset that a small business owns. A) Profit B) Cash C) Inventory D) Accounts receivable 3) Which of the following statements concerning cash management is false? A) Cash is the most important, yet least productive, asset a small business owns. B) Young companies tend to be "cash sponges," soaking up every available dollar of cash. C) Fast-growing businesses are least likely to experience shortages. D) Cash management involves forecasting, collecting, disbursing, investing, and planning for a company's cash needs. 4) The first step in managing cash more effectively is: A) having an adequate cash reserve for emergency expenditures. B) rapid payment of accounts payable. C) speeding up payment of accounts receivable. D) understanding the company's cash flow cycle. 5) More companies fail for the lack of ________ than for the lack of ________. A) cash; profit B) profit; cash C) net revenue; gross revenue D) vision; profit 6) Which of the following measures a company's liquidity and its ability to pay its bills and other financial obligations on time? A) Cash budget B) Cash flow C) Cash management D) All of the above 7) ________ typically lead(s) sales; ________ typically lag(s) sales. A) Production; receivables B) Collections; purchases C) Receipts; production D) Purchases; collections 8) A cash budget reveals important clues about how well a company ________. A) balances its accounts receivable and accounts payable B) controls inventory C) finances its growth D) All of the above 9) A firm's cash budget should: A) be prepared on a monthly basis for at least one year in advance and cover all seasonal fluctuations. B) cover a longer planning horizon when a firm's pattern is highly variable. C) show the amount and timing of cash receipts and cash disbursements on an annual basis. D) show the amount and timing of cash receipts and cash disbursements on a quarterly basis. 10) A cash budget: A) is based on the cash method of accounting. B) is a "cash map," showing the amount and the timing of cash flowing into and out of the business over a given period of time. C) will never be completely accurate since it is based on forecasts. D) All of the above 11) Which of the following is not a step in creating a cash budget? A) Determining an adequate minimum cash balance B) Forecasting profits C) Forecasting cash receipts D) Forecasting cash disbursements 12) A cash budget is based on the cash method of accounting, meaning that cash receipts and cash disbursements are recorded in the forecast only when ________ is expected to take place. A) the transaction is predicted B) a credit sale C) the cash transaction D) projections are 13) On March 10th, a business owner receives an invoice from a supplier for $416.27 with "net 30" credit terms marked on it. On April 7th, the owner writes the supplier a check for $416.27 and mails it. When would this cash disbursement show up on the company's cash budget? A) March 10th B) March 30th C) April 7th D) April 10th 14) Jane is arguing with Joan about how much cash their small retail outlet needs as they prepare their cash budget. Jane feels that with the Christmas season coming, their busiest time, they need more cash available while Joan feels they do not because their sales volume will be up significantly. Jane and Joan are discussing which step of the cash budgeting process? A) Determining an adequate minimum cash balance B) Forecasting sales C) Forecasting cash receipts D) Forecasting cash disbursements 15) A cash budget is only as accurate as the ________ forecast from which it is derived. A) profit B) receivables C) income D) sales 16) What factors can drastically affect a company's cash flow? A) Increased competition B) Economic swings C) Normal seasonal variations D) All of the above