CBS Cash Flow Management 2

Question 1

A company collects 60% of credit sales in the month of sale and 40% in the following month. If June sales are $80,000 and July sales are $100,000, what are July cash collections?

Accepted Answer

$92,000

Answer

July collections = 60% × $100,000 + 40% × $80,000 = $60,000 + $32,000 = $92,000.

Question 2

Which cash flow statement section reflects proceeds from issuing long-term bonds?

Accepted Answer

Financing activities

Answer

Proceeds from issuing long-term debt are classified as financing activities on the cash flow statement.

Question 3

The minimum cash balance maintained to meet unexpected needs is called:

Accepted Answer

Precautionary balance

Answer

A precautionary balance is cash held to cover unexpected cash outflows or emergencies.

Question 4

Under the indirect method of the cash flow statement, a decrease in accounts receivable is:

Accepted Answer

Added to net income

Answer

A decrease in accounts receivable means cash was collected in excess of revenue recognized, so it is added to net income.

Question 5

A budget specialist notices that operating cash flow is consistently lower than net income. The most likely cause is:

Accepted Answer

Growing accounts receivable

Answer

Growing accounts receivable means revenue is recognized but cash has not yet been collected, reducing operating cash flow relative to net income.

(CBS) Certified Budget Specialist Practice Test

(CBS) Certified Budget Specialist Practice Test

CBS Cash Flow Management 2