When We Use the AFN Equation to Forecast the Additional

question 28

True/False

When we use the AFN equation to forecast the additional funds needed (AFN),we are implicitly assuming that all financial ratios are constant.If financial ratios are not constant,regression techniques can be used to improve the financial forecast.

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Definitions:

Adjusting Entries

Entries made in the accounting records at the end of an accounting period to allocate incomes and expenses to the period in which they actually occurred.

Expense Accounts

Accounts used to record the consumption of economic benefits during the operational activities of a business.

Asset Accounts

Asset Accounts are financial ledger accounts that report the value of tangible and intangible items owned by an entity, such as cash, inventory, and equipment.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, regardless of when the transaction occurred.