Complete Test Bank The Cash Budget Carey Ch.1 - Smart Accounting 4e | Test Bank Knowles by Cathy Knowles, Mary Carey. DOCX document preview.
Chapter 1: The Cash Budget
Test Bank
Type: multiple choice question
Title: Chapter 01 Question 01
1) Which of the following is not a valid reason for preparing a cash budget?
a. It enables required overdrafts to be anticipated and arranged with the bank.
b. It reveals the expected bank balance as at the end of each month.
c. It allows the business owner to see whether the business is likely to make a profit or a loss.
d. It enables the timing of fixed asset expenditure to be planned.
Type: multiple choice question
Title: Chapter 01 Question 02
2) A cash budget for the six months ended 30 June shows an anticipated overdraft of approximately £4,500. Which of the following would not reduce the expected overdraft?
a. Allowing customers one month’s credit, instead of two months in which to pay.
b. Suppliers allowing one month’s credit on purchases made, instead of cash terms.
c. Assets being leased rather than purchased for cash during the six month period.
d. Charging depreciation on fixed assets at 20% on the straight line basis, rather than 25%.
Type: multiple choice question
Title: Chapter 01 Question 03
03) Laura sells goods at a gross profit margin of 40%. Which of the following statements is true?
a. Goods sold for £900 will have cost Laura £642.80.
b. Goods sold for £900 will have cost Laura £562.50.
c. Goods sold for £900 will have cost Laura £540.
d. Goods sold for £900 will have cost Laura £360.
Type: multiple choice question
Title: Chapter 01 Question 04
04) Lisa sells jumpers at a gross profit margin of 30%. Which one of the following statements is true?
a. Jumpers costing £500 will be sold for £800.
b. Jumpers costing £500 will be sold for £700.
c. Jumpers costing £700 will be sold for £1,000.
d. Jumpers costing £600 will be sold for £900.
Type: multiple choice question
Title: Chapter 01 Question 05
05) Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month’s credit,
Purchases will be for cash.
The total cash received from customers during the six months ended 30 June, will be:
a. £180,000.
b. £225,000.
c. £195,000.
d. £210,000.
Type: multiple choice question
Title: Chapter 01 Question 06
06) Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month’s credit.
The cash received in April will be:
a. £30,000.
b. £45,000.
c. £75,000.
d. Nil.
Type: multiple choice question
Title: Chapter 01 Question 07
07) Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month’s credit.
Purchases will be for cash.
If goods are sold at a gross profit margin of 33.33%, and goods are replaced as soon as they are sold, the amount payable to suppliers in March, will be:
a. £15,000.
b. £30,000.
c. £45,000.
d. £20,000.
Type: multiple choice question
Title: Chapter 01 Question 08
08) An extract from Bridget’s Cash Budget is given below:
May | June | July | |
£’000 | £’000 | £’000 | |
Total receipts | 20 | 25 | 25 |
Total payments | 18 | 30 | 27 |
Net receipts/payments | 2 | (5) | …. |
Balance brought forward | 2 | …. | ….. |
Balance carried forward | 4 | ….. | ….. |
What is the expected bank overdraft at the end of June?
a. £5,000.
b. £4,000.
c. £1,000.
d. £9,000.
Type: multiple choice question
Title: Chapter 01 Question 09
09) An extract from Hazel’s Cash Budget is given below:
Sept | Oct | Nov | |
£’000 | £’000 | £’000 | |
Total receipts | 120 | 145 | 155 |
Total payments | 132 | 157 | 130 |
Net receipts/(payments) | (12) | (12) | 25 |
Balance brought forward | 3 | (9) | (21) |
Balance carried forward | (9) | (21) | (4) |
Which of the following overdraft facilities would you advise Hazel to request for the three months ended 30 November?
a. A little more than £9,000.
b. A little more than £21,000.
c. A little more than £4,000.
d. No overdraft facility will be needed.
Type: multiple choice question
Title: Chapter 01 Question 10
10) During July, Alison’s first month of trading, she purchased 5,000 plates at £5 each and sold 4,000 plates at £7 each.
If half of Alison’s sales were for cash and half were on one month’s credit, Alison’s Cash Budget for July would show the following:
a. Receipts from customers of £14,000.
b. Receipts from customers of £28,000.
c. Receipts from customers of £12,500.
d. Receipts from customers of £25,000.
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Smart Accounting 4e | Test Bank Knowles
By Cathy Knowles, Mary Carey