d076 Module 8 QUIZ

After W&H Inc. has developed a cash budget, what should the company do in the following months? - It should monitor its actual cash flows and then revise the cash budget if needed. W&H Inc.'s labor costs each month are an example of which item in a cash budget? - Cash disbursement Why would creating a cash budget be useful for W&H if the firm needs a loan from the bank or another short-term lender? - Cash budgets increase the lender's trust in a firm by demonstrating the firm's ability to make profits and repay loans. How do the benefits of knowing the cash position for each period differ between businesses and individuals? - Knowing the cash position allows businesses to recognize when short-term loans are needed, while it allows individuals to analyze progress toward their personal financial goals. What is the difference between tracking and monitoring cash flows? - Monitoring involves using your tracking record to evaluate cash flows against your target, identify patterns and changes in cash flows, and gauge when correction is needed. What is the main reason why it is important to track and record cash flows? - Tracking your cash flows allows you to recognize where and how your money is spent so you can monitor your cash flows and revise your budget as needed. In what situation might the software method of tracking be preferable to the spreadsheet method of tracking? - When a person has a hard time remembering to record their cash flows and when they prefer to use a card to make purchases What is the purpose of monitoring your cash flows? - Monitoring allows you to evaluate whether your actual cash flows are in line with your goals and to understand when correction or revision is needed.