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19.     Depreciation expense is usually subtracted as an operating expense to calculate budgeted ending cash on hand.

20.     The beginning available cash balance equals the beginning cash balance + the minimum cash balance desired.
21.     If cash available plus net cash receipts minus disbursements is negative, then borrowing is necessary.
22.     The working capital cycle moves from cash to inventory to receivables and back to cash.
23.     Managers want a very large cash balance possible at all times.
24.     The cash budget begins with the ending cash balance from the previous period.

25.     Line operating managers usually prepare and use the operating budget.
26.     The operating budget is a better measure of a company’s overall performance than is the financial budget.

27.     A sales budget is a prediction of sales under a given set of conditions.

28.     The sales budget is the responsibility of line management.
29.     Sales forecasts are usually prepared under the direction of the top sales executive.


30.     Activity-based budgets are an example of functional budgeting.

31.     The effectiveness of any budgeting system depends directly on whether a budget is understood and accepted by top management.

32.     Participative budgeting is the active participation of all affected employees in the formulation of the budgets.


33.     Financial planning models enable managers to get answers to “what-if” questions.

34.     Preparing a master budget using a spreadsheet is a quick and easy task.


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