ADM-Practice Final Exam

Which of the following best describes a budget?

• A historical record of financial transactions
• A projection of future financial performance
• A summary of past financial performance
• A detailed report of current financial standing

What is a benefit of budgeting?

• It allows for more accurate financial reporting
• It helps to identify potential financial problems early
• It reduces the need for financial analysis
• It provides a guarantee of financial success

What is the budgeting process?

• A one-time event at the beginning of each fiscal year
• A continuous process that involves planning, implementation, and evaluation
• A process that is only relevant to large organizations
• A process that involves only the finance department

What is a cash budget?

• A budget that projects cash inflows and outflows for a specific period
• A budget that projects only cash inflows for a specific period
• A budget that projects only cash outflows for a specific period
• A budget that projects only long-term investments

What items should be included in a cash budget?

• All cash inflows and outflows for the budget period
• Only cash inflows that are expected to occur
• Only cash outflows that are expected to occur
• Only cash inflows and outflows that are significant

What is strategic planning?

• A process of setting long-term goals and objectives for an organization
• A process of creating a detailed budget for the coming year
• A process of evaluating the financial performance of an organization
• A process of forecasting short-term cash flows

Which of the following is NOT a benefit of budgeting?

• It helps to identify potential financial problems early
• It provides a basis for performance evaluation
• It assists in resource allocation and decision making
• It guarantees success in achieving financial goals

How can a company improve its cash inflow?

• By increasing accounts payable
• By offering longer payment terms to customers
• By reducing inventory levels
• By increasing sales revenue

How can a company improve its cash outflow?

• By increasing inventory levels
• By offering shorter payment terms to customers
• By reducing accounts receivable
• By negotiating better payment terms with suppliers

What is a benefit of creating a cash budget?

• It helps identify potential cash shortfalls
• It eliminates the need for financial reporting
• It increases the need for external financing
• It ensures that all financial obligations are met on time.