Question 1

When a firm sells goods or services on credit,the owner needs to remember that for cash budgeting purposes:

Accepted Answer

A) the sale may be immediately posted as if it has been collected. 
B) the sale should be recorded in the month it was made. 
C) he/she must account for a delay between the sale and collection of proceeds. 
D) such a transaction counts as a cash disbursement. 
A) the sale may be immediately posted as if it has been collected. 
B) the sale should be recorded in the month it was made. 
C) he/she must account for a delay between the sale and collection of proceeds. 
D) such a transaction counts as a cash disbursement.

Question 2

Which of the following is an effective way to trim overhead?

Accepted Answer

A) Leasing inventory 
B) Accelerating accounts receivable 
C) Establishing lockboxes or zero balance accounts 
D) Negotiating fixed loan payments to coincide with company cash flow 
A) Leasing inventory 
B) Accelerating accounts receivable 
C) Establishing lockboxes or zero balance accounts 
D) Negotiating fixed loan payments to coincide with company cash flow

Question 3

Exchanging goods and services for other goods and services,or ________,is an effective way for a small business to conserve cash.

Accepted Answer

A) leasing 
B) bartering 
C) arbitraging 
D) credit sales 
A) leasing 
B) bartering 
C) arbitraging 
D) credit sales

Question 4

One disadvantage of carrying too much inventory is controlling and managing the inventory.

Accepted Answer

A) True 
 B)False

Question 5

The first step in preparing a cash budget is to forecast cash receipts.

Accepted Answer

A) True 
 B)False

Question 6

The cash budget is based on the residual method of accounting.

Accepted Answer

A) True 
 B)False

Question 7

The heart of the cash budget is the ________ forecast.

Accepted Answer

A) cash receipts 
B) cash disbursements 
C) sales 
D) receivables 
A) cash receipts 
B) cash disbursements 
C) sales 
D) receivables

Question 8

Small businesses selling on credit find that:

Accepted Answer

A) it is relatively inexpensive and simple. 
B) it is expensive and requires a great deal of effort. 
C) it is essentially borrowing money from the customer. 
D) many can get by without selling on credit because their business customers don't expect to use credit. 
A) it is relatively inexpensive and simple. 
B) it is expensive and requires a great deal of effort. 
C) it is essentially borrowing money from the customer. 
D) many can get by without selling on credit because their business customers don't expect to use credit.

Question 9

Most small businesses conduct a thorough credit investigation before selling to a new customer.

Accepted Answer

A) True 
 B)False

Question 10

The first step to building a workable credit policy is:

Accepted Answer

A) screening customers carefully before granting them credit. 
B) establishing a firm credit policy in writing. 
C) developing a policy for pursuing past-due accounts. 
D) creating a thorough credit application. 
A) screening customers carefully before granting them credit. 
B) establishing a firm credit policy in writing. 
C) developing a policy for pursuing past-due accounts. 
D) creating a thorough credit application.

Question 11

An important first step in protecting the small business from bad debt losses is a detailed credit application.

Accepted Answer

A) True 
 B)False

Question 12

A cash budget is based on the accrual method of accounting.

Accepted Answer

A) True 
 B)False

Question 13

Many successful,growing,and profitable businesses fail because they:

Accepted Answer

A) become insolvent. 
B) don't have adequate cash to meet the sales. 
C) don't have management expertise. 
D) Both A and B 
A) become insolvent. 
B) don't have adequate cash to meet the sales. 
C) don't have management expertise. 
D) Both A and B

Question 14

Some experts suggest that a small business should maintain a supply of cash on hand equal to one-fourth its current debts.

Accepted Answer

A) True 
 B)False

Question 15

Small business managers need not be concerned about investing surplus cash since small amounts of cash sitting around for a few days or weeks are not worth investing.

Accepted Answer

A) True 
 B)False

Question 16

________ is simply the money owed the firm by customers because they've purchased goods or services on credit.

Accepted Answer

A) Accounts receivable 
B) Accounts payable 
C) Barter 
D) Cash management 
A) Accounts receivable 
B) Accounts payable 
C) Barter 
D) Cash management

Question 17

Small business owners should not press customers for payment of their past due accounts for fear of losing them as customers altogether.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following items appear on a cash budget?

Accepted Answer

A) Depreciation 
B) Bad debt expenses 
C) Noncash items not involving cash transfers 
D) Cash receipts and disbursements 
A) Depreciation 
B) Bad debt expenses 
C) Noncash items not involving cash transfers 
D) Cash receipts and disbursements

Question 19

A ________ is nothing more than a "cash map," showing the amount and timing of the cash receipts and the cash disbursements day by day,week by week,or month by month.

Accepted Answer

A) cash budget 
B) cash on hand 
C) cash disbursement 
D) Both A and C 
A) cash budget 
B) cash on hand 
C) cash disbursement 
D) Both A and C

Exam 15: Managing Cash Flow

When a firm sells goods or services on credit,the owner needs to remember that for cash budgeting purposes:

Which of the following is an effective way to trim overhead?

Exchanging goods and services for other goods and services,or ________,is an effective way for a small business to conserve cash.

One disadvantage of carrying too much inventory is controlling and managing the inventory.

The first step in preparing a cash budget is to forecast cash receipts.

The cash budget is based on the residual method of accounting.

The heart of the cash budget is the ________ forecast.

Small businesses selling on credit find that:

Most small businesses conduct a thorough credit investigation before selling to a new customer.

The first step to building a workable credit policy is:

An important first step in protecting the small business from bad debt losses is a detailed credit application.

A cash budget is based on the accrual method of accounting.

Many successful,growing,and profitable businesses fail because they:

Some experts suggest that a small business should maintain a supply of cash on hand equal to one-fourth its current debts.

Small business managers need not be concerned about investing surplus cash since small amounts of cash sitting around for a few days or weeks are not worth investing.

________ is simply the money owed the firm by customers because they've purchased goods or services on credit.

Small business owners should not press customers for payment of their past due accounts for fear of losing them as customers altogether.

Which of the following items appear on a cash budget?

A ________ is nothing more than a "cash map," showing the amount and timing of the cash receipts and the cash disbursements day by day,week by week,or month by month.

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

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