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FIN 300 exam 2 Questions and Correct
Answers
The balancing problem in forecasting refers to which of the
following? Ans: the cost of new debt and its impact on forecasting
retained earnings
Which of the following items on the income statement and balance
sheet is most likely to vary spontaneously with sales? Ans: notes
payable
Additional funds needed represents: Ans: the amount to be
borrowed
Sales will grow from $100,000 this year to $150,000 next year.
Preferred dividends were $10,000 this year. What is the new
projected amount of preferred dividends? Ans: $ 10,000
Which of the following items on the income statement and balance
sheet is least likely vary spontaneously with sales? Ans: plant and
equipment
Each of the following items on the income statement and balance
sheet tend to vary spontaneously with sales except? Ans:
accumulated depreciation
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, 2 | Page
A financial plan consisting of projected future financial statements
are called:
Hint: "In the form of" is the key here! Ans: pro forma financial
statements.
Which of the following does not represent a financial plan?
Hint: A financial plan looks ahead. Ans: A balance sheet
Which one of the following is not a method of forecasting future
business activity? Ans: Analysis of last year's financial statements
Which of the following pro forma statements is likely to be
calculated first by the financial manager who is creating next
year's financial plan?
Hint: Where is the primary "independent" variable for the plan
found? Ans: Income statement
Which of the following income statement accounts is not likely to
vary with sales?
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, 3 | Page
Hint: Which of the following is a function of something other than
sales? Ans: Depreciation expense
Which of the following balance sheet accounts is not likely to vary
directly with changes in sales?
Hint: Which of the following is affected least by sales? Ans: Long-
term debt
In the pro forma balance sheet, which of the following is normally
the "plug" number inserted to "balance" the balance sheet? Ans:
Additional funds needed
Amex Corporation forecasts a 15% increase in sales, and similar
effects for its accounts receivable ($3 million), inventory ($4
million), and accounts payable ($3.5 million). All other financial
statement accounts will remain the same, and Amex will pay out
all earnings to shareholders as dividends. What is Amex's expected
additional funds needed?
Hint: Estimate the changes in net working capital? Ans: $525,000
© 2025 All rights reserved
FIN 300 exam 2 Questions and Correct
Answers
The balancing problem in forecasting refers to which of the
following? Ans: the cost of new debt and its impact on forecasting
retained earnings
Which of the following items on the income statement and balance
sheet is most likely to vary spontaneously with sales? Ans: notes
payable
Additional funds needed represents: Ans: the amount to be
borrowed
Sales will grow from $100,000 this year to $150,000 next year.
Preferred dividends were $10,000 this year. What is the new
projected amount of preferred dividends? Ans: $ 10,000
Which of the following items on the income statement and balance
sheet is least likely vary spontaneously with sales? Ans: plant and
equipment
Each of the following items on the income statement and balance
sheet tend to vary spontaneously with sales except? Ans:
accumulated depreciation
© 2025 All rights reserved
, 2 | Page
A financial plan consisting of projected future financial statements
are called:
Hint: "In the form of" is the key here! Ans: pro forma financial
statements.
Which of the following does not represent a financial plan?
Hint: A financial plan looks ahead. Ans: A balance sheet
Which one of the following is not a method of forecasting future
business activity? Ans: Analysis of last year's financial statements
Which of the following pro forma statements is likely to be
calculated first by the financial manager who is creating next
year's financial plan?
Hint: Where is the primary "independent" variable for the plan
found? Ans: Income statement
Which of the following income statement accounts is not likely to
vary with sales?
© 2025 All rights reserved
, 3 | Page
Hint: Which of the following is a function of something other than
sales? Ans: Depreciation expense
Which of the following balance sheet accounts is not likely to vary
directly with changes in sales?
Hint: Which of the following is affected least by sales? Ans: Long-
term debt
In the pro forma balance sheet, which of the following is normally
the "plug" number inserted to "balance" the balance sheet? Ans:
Additional funds needed
Amex Corporation forecasts a 15% increase in sales, and similar
effects for its accounts receivable ($3 million), inventory ($4
million), and accounts payable ($3.5 million). All other financial
statement accounts will remain the same, and Amex will pay out
all earnings to shareholders as dividends. What is Amex's expected
additional funds needed?
Hint: Estimate the changes in net working capital? Ans: $525,000
© 2025 All rights reserved
