D076 OA EXAM 2 2025
What is the name for a forecast of short-term events that helps a company understand if it has
sufficient cash? - Cash budget
What is the purpose of a monthly cash budget? - To control cash inflows and outflows so you can
balance income with expenditures and savings. (Controlling cash inflows and outflows allows you to
use your money in the most effective way possible.)
In which situation would a firm need to borrow cash? - When the beginning cash balance plus the
net cash is less than the minimum cash balance required for the month. (This indicates to a firm that
additional financing will be needed during the period to operate effectively.)
How can you use the envelope method of budgeting to monitor cash flows? - Put the amount of
money budgeted for each category of your expenses into labeled envelopes and then spend the
money in each envelope on expenses in that category. (This method will help you plan and monitor
your cash flows._
How should you go about making changes to your budget? - Prioritize the changes you want to make
and then implement them gradually one by one to make sure they work. (Revising your budget in
this way will help changes go smoothly and help your company or family members become familiar
with the changes.)
You are a financial manager of a company. The marketing department has informed you that the
projected sales growth for the upcoming year is 15%. As you conduct financial forecasting, you
increase cash, accounts receivable, and inventory accounts by 15%—the same as the projected sales
growth. What type of accounts are these? - Discretionary accounts (Discretionary accounts are
accounts that do not vary automatically with sales but are left to the discretion of management. The
accounts in the question increase the same percentage as sales growth.)
What does it mean when a firm's calculated discretionary financing needed (DFN) is negative? - The
firm will have enough financing to fund projected sales. (If total projected liabilities and owners'
equity are greater than total projected assets, then no additional financing is needed.)
Which account is a spontaneous account? - Accounts payable (Accounts payable is a spontaneous
account that varies with sales.)
What is the name for a forecast of short-term events that helps a company understand if it has
sufficient cash? - Cash budget
What is the purpose of a monthly cash budget? - To control cash inflows and outflows so you can
balance income with expenditures and savings. (Controlling cash inflows and outflows allows you to
use your money in the most effective way possible.)
In which situation would a firm need to borrow cash? - When the beginning cash balance plus the
net cash is less than the minimum cash balance required for the month. (This indicates to a firm that
additional financing will be needed during the period to operate effectively.)
How can you use the envelope method of budgeting to monitor cash flows? - Put the amount of
money budgeted for each category of your expenses into labeled envelopes and then spend the
money in each envelope on expenses in that category. (This method will help you plan and monitor
your cash flows._
How should you go about making changes to your budget? - Prioritize the changes you want to make
and then implement them gradually one by one to make sure they work. (Revising your budget in
this way will help changes go smoothly and help your company or family members become familiar
with the changes.)
You are a financial manager of a company. The marketing department has informed you that the
projected sales growth for the upcoming year is 15%. As you conduct financial forecasting, you
increase cash, accounts receivable, and inventory accounts by 15%—the same as the projected sales
growth. What type of accounts are these? - Discretionary accounts (Discretionary accounts are
accounts that do not vary automatically with sales but are left to the discretion of management. The
accounts in the question increase the same percentage as sales growth.)
What does it mean when a firm's calculated discretionary financing needed (DFN) is negative? - The
firm will have enough financing to fund projected sales. (If total projected liabilities and owners'
equity are greater than total projected assets, then no additional financing is needed.)
Which account is a spontaneous account? - Accounts payable (Accounts payable is a spontaneous
account that varies with sales.)
