Question

QUESTION 4

1. In a forecast of budgeted Revenues, the forecast is most affected by:

   	a.	The expertise of the forecaster
   	b.	The assumptions used in preparing the forecast
   	c.	The level of expenses aanticipated
   	d.	None of the above answers are correct

QUESTION 5

1. The concept of present-value analysis is based on the belief that:

   	a.	Today's dollar will be worth the same in 2 years
   	b.	The value of a dollar in the future is less than the value of the dollar today
   	c.	The value of a dollar in the future is higher than the value of the dollar today.
   	d.	None of the above answers are correct

QUESTION 6

1. In building a revenue forecast for your organization, your assumptions can be based upon or affected by:

   	a.	Trend analysis
   	b.	Utilization changes
   	c.	Payer rate changes
   	d.	All of the above
   	e.	None of the above

QUESTION 7

1. When evaluating an organization's Total Accounts Receivable, we use the measure "Days Receivable", when using this measure

   	a.	A higher number of days receivable is better
   	b.	A lower number of days receivable is better
   	c.	This is the wrong measure to use, instead we should use Days Cash on Hand
   	d.	None of the above answers are correct

Answer 1

4. The correct answer to the question is b. (The assumption used in preparing the forecast). Forecasting is based on various kinds of factors like the changes in social, political, economical, and technological factors. While forecasting about a revenue budget of the organization, certain assumptions are made with regards to stability and non stability of these factors and therefore the revenue fore cast is most affected by the assumptions made while forecasting budget.

5. The correct answer is b (The value of dollar received in the future will lower than the value of dollar received today). The present value theory states that, the value of money received in future will be less as compared to its value in present. This is due to the element of inflation which is present in the economy.

6. The correct answer is d. (all of the above). The revenue forecast is based on all the three factors that a forecaster must be aware of, in order to make sure that most accurate revenue forecast is done. Trend analysis helps in analyzing the past trends of revenues and the demand patter of the consumers. The payer rate changes helps in analyzing the effect of change in rate on the demand of services or goods. While utilization changes helps in ascertaining the capacity utilized previously and what pattern can be expected in the future as well.

7. The correct answer is b ( A lower number of days receivable is better). The formula for calculating days receivable is 360 days / debtors turnover ratio. A lower number suggest that the amount lent by the company in the form of credit sales is received from customers in less days as compared to a higher number which suggests that the amount remain stuck with borrowers for a long time. Therefore, a lower number of days receivable is better and effective for the company in the longer run.