Finance Exam 2

Of the following, which is NOT a form of equity financing?

a) A loan b) Retained earnings c) Government funding d) Gifts e) Donations a) A loan

Of the following, which is not an advantage of incremental budgeting?

a) The budget is stable and change is gradual b) The approach encourages managers to spend up to the budget to ensure that the budget is maintained the following year. c) Managers can operate their departments on a consistent basis. d) Coordination between budgets is easier to achieve. b) The approach encourages managers to spend up tot he budget to ensure that the budget is maintained the following year.

When a team has signed multiyear contracts to receive money, these revenue sources can be used as collateral to get loans. This is referred to as CONTRACTUALLY OBLIGATED INCOME

Contractually obligated income

(Refer to #19 in this quizlet) If the sale price of this bond was $10,103 a year later, what is the capital gains yield?

N/A

*Open ended* Calculate straight line and sum of years digits depreciations schedules for a $2000 machine that will have a salvage value of $0 after 5 years of use.

N/A

Calculate the discounted payback period and the NPV of the project. Based on the your findings, would you recommend Yale move forward with this project? Provide support for you answer

N/A

The hartford yard goats have a bond issue outstanding with an annual coupon rate of 7%. Par value of the bond is $10,000. Calculate the current yield of the bond if the bond's current price was $8,480.

N/A

The PAR VALUE of a bond is the face value, or amount of principal that the body is worth when the principal amount is due.

Par value

This budgeting system is associated with output budgeting in which specific goals and objectives form the framework for a strategic, goal oriented budgeting process.

Program planning budgeting systems

The CASH BUDGET forecasts how much cash the organization will have on hand and how much it will need to meet expenses.

Cash budget

Which of the following is sold by either a government agency or a non-profit corporation set up to build a facility?

Certificate of participation

Which of the following is added to the risk-free rate to reflect the likelihood that the issuer will default?

Default risk premium

..satisfy benefit principle

Donations or gifts would satisfy this principle as those who are doing the donating would be rewarded by the organization and given benefits for their gestures.

Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the asset's use?

Double-decling balance

The EXPENSE BUDGET lists the primary activities undertaken by a unit to achieve it goals and allocate dollar amounts to each.

Expense budget

Describe one source of financing that would satisfy the principle of horizontal equity.

Got it wrong Horizontal equity: same income, same taxes

Last year's budget is increased or decreased by a % using this method of budgeting (a form of line-item budgeting.)

Incremental budgeting

Why would Uconn athletic department implement ZBB? What are the advantages?

It would give the Uconn athletic department full attention to the fiscal year at hand rather than having to keep comparing the budget from previous years. You'll never go over your budget. You pay attention to more of your expenses. Every activity you do is questioned. Each plan of action must be justified. Disadvantage: very time consuming (-3 out of 5 points)

Which type of bond is a form of public finance paid off solely from specific, well defined sources such as hotel taxes, ticket taxes, or other sources of public funding?

Revenue bonds

A REVENUE BUDGET is a forecast because it is based on projecting future sales.

Revenue budget

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account with depreciation occurring late after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, accelerating depreciation

Of the following, which is an indirect source of public financing?

Tax abatements

Describe the process of the zero based budgeting and two of the four requirements of ZBB

The zero based budgeting plan involves starting an organizations budget from scratch every fiscal year rather than continuing the budget from the previous year. Have to prove why you need that money. They have to approve everything that goes into the budget. (-2 out of 5 points)