10. The method of forecasting financial requirements based on forecasted financi

Question

10. The method of forecasting financial requirements based on forecasted financial statements is known as the a. pro forma cash flow statements method b. pro forma retained earnings method c. forecasted income and expense method d. projected operating cash flow method e. projected balance sheet method 11. Which of the following statements is correct regarding cash budgets? a. Cash disbursements for credit purchases are not included in cash budgets b. Only cash inflow from cash sales are included in cash budgets. c. The target cash balance set in cash budgets are fixed. d. Cash budgets do not include cash flow through investment activities. e. Cash budgets include the tax expenses of a firm.

Explanation / Answer

Answer :10.Projected balance sheet method

Steps of Projected balance sheet method : 1.Forecast the Income statement , 2.Forecast the balance sheet 3.Raising the additional funds needed 4.Accounting for financing feedbacks

Answer :11.e.Cash budgets include the tax expenses of a firm.

a.All kinds of cash disbursements are included

b.All cash revenues are included

c.Cash balances are not fixed

d.Cashflow thru investment activities are included in cash budget.

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