Financial Planning and Budgets

Long-term plans consider the costs and returns for fixed assets, research and development activities, marketing and product development actions, capital structure, and major sources of financing.

• True

• False

Short term financial plans specify day to day operations, financial actions that will take place within the year, and the anticipated impact of those actions.

• True

• False

What type of planning involves purchasing inventory?

• Short term planning

• Long term planning

What type of planning is purchasing land and equipment for a new factory?

• Short term financial planning

• Long term financial planning

What type of financial planning involves deciding on capital structure (equity financing vs. debt financing)?

• Short term Planning

• Long term planning

Finding a source of funds to pay for employee salaries next month involves what type of financial planning?

• Short term financial planning

• Long term financial planning

An accurate sales forecasts is not important in budgeting because it may be adjusted at any time.

• True

• False

What are the characteristics of a budget?

• A financial plan for a defined period of time

• Goals and objectives are documented in financial terms

• May include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows

• All of the above

What budget shows the expected number of sales units of a period, the expected price per unit and total sales.

• Sales Budget

• Production Budget

• Operations Budget

• Cash Budget

What budget calculates the number of units of products that must be manufactured to fulfill projected sales and ending inventory requirements.

• Sales Budget

• Production Budget

• Operations Budget

• Cash Budget