COA Financial Management & Budgeting Flashcards

Which budgeting approach starts from zero each period, requiring every expense to be justified regardless of prior budgets?

Answer: Zero-based budgeting

Zero-based budgeting requires justification for all expenditures from scratch each period, unlike incremental budgeting which adjusts prior figures.

An office manager receives an invoice dated July 15 with net-30 terms. What is the payment due date?

Answer: August 15

Net-30 terms mean payment is due 30 days from the invoice date, so July 15 + 30 days = August 14, but since August 14 is the 30th day, the due date is August 14.

Which financial statement shows a company's revenues and expenses over a specific time period?

Answer: Income statement

The income statement (profit and loss statement) reports revenues and expenses over a defined accounting period to show net income or loss.

A petty cash fund has a $200 limit. After reimbursements totaling $163, how much cash should remain in the fund?

Answer: $37

The remaining cash equals the fund limit minus total disbursements: $200 - $163 = $37.

What does 'accounts receivable' represent on a company's balance sheet?

Answer: Money owed to the company by customers

Accounts receivable represents amounts owed to the business by customers for goods or services already delivered but not yet paid.

Which cost remains constant regardless of the level of business activity or output?

Answer: Fixed cost

Fixed costs, such as rent and salaries, do not change with production volume or business activity levels within a relevant range.

An office administrator is reconciling the bank statement. Which item would appear as a deposit in transit?

Answer: Cash received and recorded by the company but not yet on the bank statement

A deposit in transit is cash received and recorded in the company's books but not yet reflected in the bank statement.