Exam 10: The Financial Plan

Owner's equity represents:

To satisfy outside investors,the financial plan will need three years of projected financial data.

______ is projected net profit calculated from projected revenue minus projected costs and expenses.

Assets represent the net worth of the firm.

Using the ________ method of projecting cash flow,adjustments are made to net income based on the fact that cash may not actually be received or disbursed.

In an Internet start-up,advertising costs will be extensive to create awareness of the website.

Profit from the business would be included on the balance sheet in which section?

The first step in preparing a pro forma income statement is to separate fixed and variable costs.

Which of the following is likely to be a fixed cost?

Which of the following would be considered a variable expense?

Profit from the business will be included on the balance sheet in the assets section.

Equipment would be included on the balance sheet in which section?

Capital budgets project expenditures on new equipment,vehicles,computers,or new facilities.

Pro forma cash flow is

Cash flow:

Sales in excess of the break-even point will result in a profit,as long as the selling price remains above the cost to produce each unit.

The pro forma balance sheet depicts the condition of the business at one point in time.

Fixed expenses:

Many profitable firms fail because of lack of cash.

As long as the selling price is less than the variable cost per unit,some contribution will be made to cover fixed costs.