f. exam EOW(Answer)

f. exam EOW(Answer) - Mid term exam Accounting For Managers...

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Mid term exam Accounting For Managers 2 hours ـــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــــ ـــــــــــــــــــــــــ Q1: True OR False(10 marks) : 1. The usual starting point in budgeting is to forecast net income. Answer : False Difficulty : 2 Objective : 3 Terms to Learn : operating budget The usual starting point in budgeting is to forecast sales demand and revenues. 2. 2. The revenues budget should be based on the production budget. Answer : False Difficulty : 1 Objective : 3 Terms to Learn : operating budget The production budget should be based on the revenues budget. 3. 3. The operating budget is that part of the master budget that includes the capital expenditures budget, cash budget, budgeted balance sheet, and the budgeted statement of cash flows. Answer : False Difficulty : 1 Objective : 3 Terms to Learn : operating budget Described is the financial budget part of the master budget, not the operating budget. 4. 4. A four-quarter rolling budget encourages management to be thinking about the next 12 months. Answer : True Difficulty : 2 Objective : 2 Terms to Learn : rolling budget 5. 5. Since fixed manufacturing overhead is fixed, it is not normally included in the operating budget. Answer : False Difficulty : 2 Objective : 3 Terms to Learn : operating budget Fixed manufacturing is normally included in the operating budget. 6. 6. Discounted cash flow methods focus on operating income. Answer : False Difficulty : 2 Objective : 3 Terms to Learn : discounted cash flow (DCF) methods
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Discounted cash flow methods focus on cash inflows and cash outflows. 7. Internal rate of return is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time. Answer : False Difficulty : 2 Objective : 3 Terms to Learn : internal rate-of-return (IRR) method The internal rate of return calculates the discount rate at which the present value of expected cash inflows from a project equals the present value of expected cash outflows. 8. Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds. Answer : True Difficulty : 2 Objective : 7 Terms to Learn : capital budgeting 9. A decrease in the tax rate will decrease the net present value (NPV) for a given capital budgeting project. Answer : False Difficulty : 2 Objective : 7 Terms to Learn : capital budgeting A decrease in the tax rate will increase the net present value (NPV) for a given capital budgeting project. 10. Discounted cash flow methods measure all the expected future cash inflows and outflows of a project as if they occurred at equal intervals over the life of the project.
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