True/False
Indicate whether the
sentence or statement is true or false.
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1.
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The cash flow statement is important because it shows how much money you have
available to pay your bills.
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2.
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If your cash budget shows you will have a surplus of cash in two years, you
should begin arranging financing or generating capital now.
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3.
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To improve your cash flow, you can increase cash receipts or decrease
disbursements, but you cannot do both.
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4.
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One way to increase your cash receipts is to decrease your accounts receivable
by getting customers to pay more quickly.
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5.
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Many businesses have cash flow problems because they start off with too little
capital.
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6.
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If you have cash flow problems, you can reduce your disbursements by holding
more inventory.
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7.
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If your cash flow will improve in a month, you can charge some of your purchases
on a credit card in order to delay payment.
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8.
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Analyzing your sales by product can help you increase sales and profits.
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9.
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Net profit on sales is found by dividing net sales by net income after
taxes.
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10.
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Gross sales equal the sum of gross profit and cost of goods sold.
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11.
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to determine your net income after taxes, you must calculate gross profit, net
income from operations, and net income before taxes.
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12.
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Gross profit is found by subtracting expenses and cost of goods sold from net
sales.
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13.
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Comparing the profit ratio for your business with the average profit ratio in
your industry can help you increase your profits.
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14.
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Above the breakeven point, your revenues are greater than your expenses and you
earn profits.
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15.
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If your sales are below the breakeven point, you will have to increase your
prices, increase the quantity you sell, or reduce your costs.
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16.
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Professionals who provide financial management services include bankers,
insurance agents, and certified public accountants.
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17.
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Attorneys can keep you informed of changes in laws that could affect your
business and can prepare your financial statements.
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18.
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By consulting other people in your industry, you can find out if anyone you know
can recommend a financial advisor.
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19.
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Financial experts can help a business owner with financial, strategic, and tax
planning.
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20.
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Strategic planning involves analyzing financial statements in order to make
recommendations on ways to increase sales and reduce costs.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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21.
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To improve your cash flow, you can
a. | decrease accounts payable | c. | decrease cash
receipts | b. | increase accounts receivable | d. | decrease
disbursements |
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22.
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You can improve your cash flow by
a. | increasing number of hours employees work each week | c. | reducing your
inventory | b. | reducing some of your fixed expenses | d. | all of these |
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23.
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The columns of a cash budget show
a. | estimated cash disbursements | c. | the difference between estimated
and actual cash flow | b. | estimated cash receipts | d. | all of these |
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24.
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to calculate net income before taxes, you must calculate
a. | gross sales | c. | net income from operations | b. | gross
income | d. | all of
these |
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25.
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Above the breakeven point
a. | revenues excee expenses | c. | expenses exceed
revenues | b. | you neither make nor lose money | d. | you will lose
money |
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26.
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If annual sales for Department A are $55,900 and total sales ar $93,600, what
percent of sales come from Department A?
a. | 40.3 percent | c. | 59.7 percent | b. | 16.7 percent | d. | 61.3 percent |
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27.
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Net profit on sales is found by dividing
a. | cost of goods sold by gross profit | c. | net income after taxes by net
sales | b. | net sales by net income from operations | d. | gross sales by net income from
operations |
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28.
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To make sure that you make the right choice in selecting a financial advisor,
you should
a. | research financial management | c. | consider choosing an advisor who
charges a fee rather than a commisssion | b. | find out if anyone you know in your industry
can recommend an advisor | d. | all of these |
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29.
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Planning that involves analyzing financial statements in order to assess the
financial health of your business is
a. | strategic planning | c. | tax planning | b. | financial planning | d. | investment
planning |
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30.
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What type of expert can keep you informed of changes in laws that could affect
your business?
a. | Investment broker | c. | Attorney | b. | Banker | d. | Financial
planner |
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Matching
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a. | Estimated cash flow | f. | net profit on sales | b. | increase | g. | selling price per unit | c. | increase | h. | banker | d. | gross sales | i. | investment broker | e. | gross
profit | j. | tax
planning |
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31.
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Should you increase or decrease your accounts payable to improve your cash
flow?
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32.
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What do you get when you divide net income after taxes by net sales?
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33.
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What is shown in the first column of numbers in a cash budget?
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34.
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What kind of planning involves keeping you informed of tax laws and
incentives?
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35.
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What is the dollar amount of all sales, including returns, called?
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36.
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Should you increase or decrease your cash receipts to improve your cash
flow?
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37.
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What do you get when you subtract cost of goods sold from net sales?
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38.
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What kinds of financial professional will provide free advice on investing your
excess cash?
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39.
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What kind of financial professional can help you analyze your financial
statements
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40.
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What do you need to know to calculate the breakeven point in addition to total
fixed costs and variable cost per unit?
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