MASTER OF BUSINESS

ADMINISTRATION

Financial Management
of the Future
Assignment No. I: Quiz 1

Prepared by:
Tawfik AbdelMajeed Aydieh

Supervised by:
Dr. Hesham Khalil
November, 2017
 Financial Management – IBSS- Quiz 1

True/ false
Answer only 10 of the following (each one of 5)

1. Usually, a company creates a Financial Plan before vision & objectives have been set. False

2. A budget is a realistic plan for the future expressed in qualitative terms. False

3. Accounting is the process of identifying, measuring & communicating economic

True
information to permit informed judgments & decisions by users of the Information

4. Balance sheet includes assets, liabilities, & Income False

5. Budgets are not considered as manager’s tool to plan, understand, & control
False
operations.

6. An operating budget is the major part of a master budget that focuses on the income
True
statement & its supporting schedules.

7. The major drawback of using historical results for judging current performance is that
True
inefficiencies may be concealed in the past performance.

8. A budget is a quantitative expression of a plan of action. True

9. Cash collections from customers include the current month’s cash sales minus
False
collections on credit sales.

10. A sales budget is a prediction of sales, cost, & future profits under a given set of
False
conditions.

11. Cash Receipts Section, cash budget, includes only the expected cash receipts from
False
cash sales & collections on credit sales.

12. Direct Labor Budget Shows both the quantity of hours & cost of direct labor necessary
True
to meet production requirements.

MCQs
Answer the following (each one of 10)
1. For next year, Enron Co. has budgeted sales of 45,000 units, target ending finished goods inventory
of 1,200 units, & a beginning finished goods inventory of 900 units.
45,300 units should be produced.
All other inventories are zero. __________
1. 44,700 units
2. 45,300 units
3. 47,100 units
4. 45,350 units

45,000 + (1,200 - 900) = 45300

Units
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2. Jacobson Co has the following data:
Month Budgeted Sales
January $108,000
February 132,000
March 144,000
April 120,000
The average mark-up on products is 40%, & the inventory at the end of Dec was $19,000 & desired
$25,920
inventory levels are 30% of next month's sales at cost. ___________ is the desired ending
inventory for February.
1. $25,920
2. $43,200
3. $17,280
4. $86,400

$144,000 X 0.30 (100 - 0.40) = $144,000 X 0.3 X 0.6 = $25,920

$
3. Gorgeous Corporation has the following information:
Month Budgeted Sales
May $46,000
June 60,000
July 62,000
August 58,000

The cost of goods sold percentage is 65% & the desired inventory level is 25% of next month's sales.
$39,325
__________ is the expected total purchases budgeted for June.
1. $39,325
2. $38,675
3. $32,500
4. $58,825

($60,000 X 0.65) + ($62,000 X 0.65 X 0.25) - ($60,000X0.65X0.25) = $39325

4. Alexandria Co expects a total of $20,000 sales in June. Of these, credit sales are expected to be
$12,000. Collections are 50% in the month of sale, 40% in the month following the sale, & 5% two
$14,000
months following the sale. The remaining 5% is expected to be uncollectible. _____________ is
the estimated cash collection in June from June sales.

1. $14,000
2. $20,000
3. $17,200
4. $9,200

($20,000 - $12,000) + ($12,000 x .50) = $14,000

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5. Suit Co has the following information:
Month Budgeted Purchases
January $27,800
February 29,000
March 30,520
April 29,480
May 27,680

Purchases are paid for in the following manner: 10% in the month of purchase/ 50% in the month
_____ is the estimated cash disbursement
after purchase/ 40% two months after purchase. $11,120
in March from January purchases.
1. $10,720
2. $11,120
3. $3,052
4. $12,208

($27,800 - x 0.50) = $11,120

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