Examples of unethical behavior when trying to meet a budgeted target include:

Question 1Examples of unethical behavior when trying to meet a budgeted target include:

A. Overbilling customers

B. Recording revenue that was shipped before the month-end deadline

C. Entering supplier invoices in the accounting system during a bonus period

D. Not using contractors

Question 2Net present value analysis can be a poor choice for capital budgeting analysis because:

A. It uses a risk-adjusted discount rate

B. It does not include the impact of depreciation on income taxes

C. Cash flow projections may be inaccurate

D. Managers tend to be conservative with their cash flow projections

Question 3Forecasting without a budget:

A. Requires a system that can be easily updated

B. Is a good replacement for budgeting if done as a rolling forecast

C. Is done at an aggregate level

D. All answers are

Question 4Alternatives to a budget for a company to maintain direction include:

A. Focusing on the margins

B. Managing by key value drivers

C. Centralizing data management to quickly changing direction when needed

D. All answers are

Question 5In a lease versus buy decision, a lease can be easier to obtain than a line of credit, because:

A. The lessor does not require collateral on the lease

B. A lease is only granted to low-risk companies

C. A lease is only granted to companies having strong cash flows

D. The lease agreement designates the asset being financed as collateral

Question 6The advantages of budgeting include:

Answers:            

A. A rigid decision-making process

B. Modeling different scenarios from which to choose

C. Gaming the system

D. Use it or lose it mentality

Question 7The CFO’s responsibilities in capital budgeting include:

A. All answers are

B. Determining which projects to abandon

C. Performing a facility analysis when expanding operations

D. Matching capital expenditure to the company’s strategy

Question 8In the system of budgets for a multi-division company, budgeting for cash repatriation is needed when:

A. Cash is centralized for investment purposes

B. Customers are supposed to pay the company in cash

C. The amount of planned working capital is negative

D. Subsidiaries are located in countries that restrict the flow of cash back to the parent company

Question 9In the outsourcing decision it’s possible to reduce costs when:

A. The supplier is located in a low-cost region

B. The supplier does not have excess capacity

C. The supplier does not have high production volume

D. The supplier wants escalation clauses

Question 10When preparing a rolling forecast:

A. Keep the timeline short to make updating easier

B. Address only key variables

C. Focus on the areas that will make a difference to the business

D. All answers are