Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 13, Problem 19CADQ
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İn some organizations (firms, universities, government agencies), spending appears to increase as the end of the budgeting period approaches, even if there are no seasonal differences. What might cause this?
(A). "Our cash budget shows a surplus for the quarter, so we do not have to think about arranging any bank financing." Comment on this statement.
(B). Accrual accounting is preferable to cash flow accounting because the information is more relevant to all users of financial statements. Discuss and answer the question
“The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year.” Do you agree? Explain.
Which of the following items will not appear on a cash budget? A) Expected cash paymentsB) Expected credit salesC) Expected cash collectionsD) All of the above will appear on a cash budget
Chapter 13 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - What role does the master budget play in the...Ch. 13 - What problems might arise if a firm relies solely...Ch. 13 - What is the coordinating role of budgeting?Ch. 13 - Prob. 7RQCh. 13 - Write out the inventory equation that is used to...Ch. 13 - What makes creating budgets for marketing and...Ch. 13 - Prob. 10RQ
Ch. 13 - Preparing a budget is a waste of time. The...Ch. 13 - In the Business Application feature, Using the...Ch. 13 - Prob. 13CADQCh. 13 - Would the budgeting plans for a company that uses...Ch. 13 - Government agencies are limited in spending by...Ch. 13 - What is the difference between the planning and...Ch. 13 - When might the master budget start with a forecast...Ch. 13 - In some organizations (firms, universities,...Ch. 13 - Our cash budget shows a surplus for the quarter,...Ch. 13 - Your boss asks for your estimate on the costs of a...Ch. 13 - The chapter identified four techniques used for...Ch. 13 - Role of Budgets and Plans
Cosmic Corporation is a...Ch. 13 - Human Element in Budgeting
Roller Partners is a...Ch. 13 - Estimate Sales Revenues Stubs-R-Us is a local...Ch. 13 - Estimate Sales Revenues Friendly Financial has 160...Ch. 13 - Estimate Sales Revenues Larson, Inc., manufactures...Ch. 13 - Estimate Production Levels Offenbach Son has just...Ch. 13 - Estimate Sales Levels Using Production Budgets...Ch. 13 - Estimate Inventory Levels Using Production Budgets...Ch. 13 - Estimate Production Levels: Capacity Constraints...Ch. 13 - Prob. 31ECh. 13 - Estimate Purchases and Cash Disbursements Midland...Ch. 13 - Estimate Purchases and Cash Disbursements Lakeside...Ch. 13 - Estimate Cash Disbursements Cascade, Ltd., a...Ch. 13 - Estimate Cash Collections Minot Corporation is...Ch. 13 - Estimate Cash Collections Ewing Company is...Ch. 13 - Estimate Cash Receipts Scare-2-B-U (S2BU)...Ch. 13 - Estimate Cash Receipts Varmit-B-Gone is a pest...Ch. 13 - Prepare Budgeted Financial Statements
Refer to the...Ch. 13 - Prepare Budgeted Financial Statements Cycle-1 is a...Ch. 13 - Prepare Budgeted Financial Statements Carreras Caf...Ch. 13 - Budgeting in a Service Organization Executive...Ch. 13 - Prob. 43ECh. 13 - Prob. 44ECh. 13 - Prob. 45ECh. 13 - Prob. 46ECh. 13 - Sensitivity Analysis Sanjanas Sweet Shoppe...Ch. 13 - Sensitivity Analysis Classic Limo, Inc., provides...Ch. 13 - Prob. 49ECh. 13 - Prob. 50ECh. 13 - Prepare Budgeted Financial Statements The...Ch. 13 - Prob. 52PCh. 13 - Prepare Budgeted Financial Statements Gulf States...Ch. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prepare a Production Budget Haggstrom, Inc.,...Ch. 13 - Sales Expense Budget SPU, Ltd., has just received...Ch. 13 - Budgeted Purchases and Cash Flows Mast Corporation...Ch. 13 - Prepare Budgeted Financial Statements HomeSuites...Ch. 13 - Prob. 60PCh. 13 - Comprehensive Budget Plan Brighton, Inc.,...Ch. 13 - Comprehensive Budget Plan Panther Corporation...Ch. 13 - Budgeted Financial Statements in a Retail...Ch. 13 - Cash Budgets and Sensitivity Analysis in a Retail...Ch. 13 - Prob. 66IC
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- In an attempt to better understand RR’s cash position, Johnson developed a cash budget for the first 2 months of the year. She has the figures for the other months, but they are not shown. After looking at the cash budget, answer the following questions: What does the cash budget show regarding the target cash level? Should depreciation expense be explicitly included in the cash budget? Why or why not? What are some other potential cash inflows besides collections? How can interest earned or paid on short-term securities or loans be incorporated in the cash budget? In her preliminary cash budget, Johnson has assumed that all sales are collected and thus that RR has no bad debts. Is this realistic? If not, how would bad debts be dealt with in a cash budgeting sense? (Hint: Bad debts will affect collections but not purchases.)arrow_forwardNow suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1 30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects.arrow_forwardThe financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than the industry average. the prior years. management's minimum required balance. the amount needed to avoid a service charge at the bank.arrow_forward
- Which of the following statements is NOT CORRECT? a. The cash budget is useful for estimating potential funding needs, especially for short-term working capital loans. b. Working capital management is critical because it affects financing decisions and the firm's profitability. c. Credit policy affects working capital because it impacts both sales and the time it takes for receivables to be obtained. d. If a company needs to increase its cash flow from operations in the next month or two, it can change its credit policy from 2/10 net 30 to net 60. e. f a company is unsure about the volume of sales, profits, and cash flows for the coming year, it will retain a relatively large amount of cash and marketable securities.arrow_forwardWe discuss how to prepare the cash budget and understand therelationships among the operating budgets, cash budget, andbudgeted balance sheet. The cash budget helps managersdetermine whether they need to borrow money to fund operations,or whether they can make repayments toward their borrowings orinvest excess cash to earn interest. The cash budget and thebudgeted balance sheet are forward-looking versions of thestatement of cash flows and the balance sheet. Soup Inc. has the following budgeted sales: January $60,000, February$80,000, and March $90,000. 40% of the sales are for cash and 60% are oncredit. For the credit sales, 75% are collected in the month of sale, and 25% thenext month. The total budgeted cash receipts for March are:arrow_forwardA. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?arrow_forward
- Which is not a section of the cash budget? cash receipts cash disbursements allowance for uncollectible accounts financing needsarrow_forwardThe percentage of accounts receivable that is uncollectible can be ignored for cash budgeting because a. no cash is received from an account that defaults. b. it is included in cash sales. c. it appears on the budgeted income statement. d. for most companies, it is not a material amount. e. None of these.arrow_forwardReview the completed master budget and answer the following questions: Is Ranger Industries expecting to earn a profit during the next quarter? If so, how much? Does the company need to borrow cash during the quarter? Can it make any repayments? Explain. (Carefully review rows 74 through 80.)arrow_forward
- 5. In her preliminary cash budget, Johnson hasassumed that all sales are collected and thusthat RR has no bad debts. Is this realistic? Ifnot, how would bad debts be dealt with in acash budgeting sense? (Hint: Bad debts willaffect collections but not purchases.)arrow_forwardThe cash budget and the budgeted statement of cash flows both provide information about cash. What information about cash is common to these two sources, and what information is unique to the two sources? Assume that in preparing the cash budget, the accountant discovers that a cash shortage will likely occur in a specific month. What actions might the accountant recommend to management to deal with the cash shortage?arrow_forwardThe cash budget and the budgeted statement of cash flows both provide information about cash. What information about cash is common to these two sources, and what information is unique to the twosources? Assume that in preparing the cash budget, the accountant discovers that a cash shortage will likely occur in a specific month. What actions might the accountant recommend to management to deal with the cash shortage?arrow_forward
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