What can a company do with the information created from forecasting cash receipts and cash payments months in advance? O Reduce the need to spend money on research and development Prepare the statement of cash flows before the year is over Efficiently change from a LIFO to a FIFO system Arrange for necessary loans in advance

What can a company do with the information created from forecasting cash receipts and cash payments months in advance? O Reduce the need to spend money on research and development Prepare the statement of cash flows before the year is over Efficiently change from a LIFO to a FIFO system Arrange for necessary loans in advance

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash And Marketable Securities

Section: Chapter Questions

Problem 28MCQ

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Suppose the company has to revise its estimates because of a downturn in the economy. Unit sales for August, September, and October will be half (50%) of the original estimates. Revise the estimates in cells 1311 through 1313. After this is done, check your forecasted balance sheet. It should still balance! What effect will this new state of affairs have on net income and borrowing? Explain why these items changed.
The net cash flow for December is coming up incorrect. Would you be able to let me know what the formular or the correct number is?
- Why does a decrease in receivable turnover create the need for cash fromoperating activities? - Why would ratios that include one balance sheet account and one incomestatement account such as receivable turnover or return on assets, bequestionable if they came from quarterly or other interim financial reports?
An advantage of this method is that it highlights how a capital investment can affect a company’s liquidity. Select one: a. Payback Method b. Accounting Rate of Return Method c. Time Value of Money d. Discounted Cash Flow Techniques. Need typed answer only.Please give answer within 45 minutes
Which of the following statements is CORRECT? Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts. A time line is not meaningful unless all cash flows occur annually. Time lines are not useful for visualizing complex problems prior to doing actual calculations. Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.
Question 13 The first step in performing planning analytical procedures is to develop an expectation of the account balance. which of the following does not typically represent a likely expected relationship for cash accounts? The company reports consistent profits over several years, but operating cash flows are declining. No unsual large cash or other liquid assest transactions are found Operating cash flow is not significantly different from that of the prior year. Investment income is consistent with the level of returns expected from investment
A. What is the liquidity position of the company? Support your answer with relevantratios B. What is the Cash Conversion Cycle for the company? Assume a 360-day year. C. Explain what is meant when a business activity has high operating gearing, andwhat are the implications for a business with high operating gearing?
Which of the following is a cash outflow? Group of answer choices a. a new issue of bonds b. a decrease in accounts receivable c. an increase in plant d. an increase in accounts payable
Develop brief answers to each of the following questions: 1. Why does a decrease in receivable turnover create the need for cash from operating activities? 2. Why would ratiosthat include one balance sheet account and one income statement account, such as receivable turnover or return on assets, be qu estionable if they came from quarterly or other interim financial reports?
When undertaling net present value calculations, an assumption is typically made that net cash inflows occur at the end of a given year. In reality, net cash flows usually occur throughout the year. What impact does that assumption of year-end net cash flows have on net present value (NPV) It has no impact on NPV because the total cash flows are the same The NPV will be overstated. The direction and significance of the Impact on NPV cannot be determined The NPV will be understated.
Reset the Data Section of the CAPBUD2 worksheet to the original values. In requirement 4, you assessed the sensitivity of the investment’s internal rate of return to changes in some of the input data. This was done in a trial-and-error fashion. Click the Chart sheet tab. Presented on the screen is a graphical analysis of the sensitivity of the internal rate of return to changes in annual cash flows. To demonstrate the usefulness of such a chart, note the ease with which you are able to answer the following questions that might be of interest to the owner: What annual cash flow (approximately) is required to: earn 0% rate of return? _______________ earn 10% rate of return? _______________ earn over 20% rate of return? _______________ Approximately, how much is the rate of return reduced for each drop of $10,000 annual cash flow? When the assignment is complete, close the file without saving it again. Worksheet. The CAPBUD2 worksheet handles only cash inflows that are even in amount each year. Many capital projects generate uneven cash inflows. Suppose that the new store had expected cash earnings of $80,000 per year for the first two years, $140,000 for the next four years, and $220,000 for the last four years. The new store will generate the same total cash return ($1,600,000) as in the original problem, but the timing of the cash flows is different. Alter the CAPBUD2 worksheet so that the NPV and IRR calculations can be made whether there are even or uneven cash flows. When done, preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as CAPBUDT. Hint: One suggestion is to label column F in the scratch pad as Uneven cash flows. Enter the uneven cash flows for each year. Modify FORMULA3 to include these cash flows. Modify the formulas in the range E30 to E39 to include the new data. Then set cell E10 (estimated Annual Net Cash Inflow) to zero. When you have even cash flows, use cell E10 and set column F in the scratch pad to zeros. If you have uneven cash flows, set cell E10 to zero and fill in column F in the scratch pad. Note that this solution causes garbage to come out in cells E15 and E16 because those formulas were not altered. Check figure for uneven cash flows: NPV (cell E17), $68,674. Chart. Using the CAPBUD2 file, develop a chart just like the one used in requirement 6 to show the sensitivity of net present value to changes in cost of the investment amount from $440,000 to $500,000 (use $10,000 increments). Complete the Chart Tickler Data Table and use it as a basis for preparing the chart. Enter your name somewhere on the chart. Save the file again as CAPBUD2. Print the chart.
Match the words to the definitions. Solvency Accounts Receivable Balance Sheet Noncurrent Assets Income Statement Retained Earnings Noncurrent Liabilities. Liquidity Current Assets Cash Flow Statement ✓ [Choose ] A forecast of the amount and timing of future cash inflows and outflows over some period of time. A summary of the revenues and expenses of a business over a given period of time. When net worth is greater than zero, or assets are greater than liabilities on the balance sheet. The ability to meet the day-to-day cash needs of the firm. Profits that are not paid out in dividends but are reinvested in the firm itself. Summarizes a firm's financial position at a given point in time and lists the firm's assets, liabilities, and net worth. Debts that others owe the business, usually arising from previous credit sales. Something the firms owns or uses that will not turn into cash within the next accounting period. Either cash or an items that will become cash in the next accounting…