Sales for Year 2 of the New Project Are Expected

question 4

Multiple Choice

Sales for year 2 of the new project are expected to increase by 10%. Current assets are expected to increase by 17% for every dollar increase in sales while accounts payable are expected to increase by 6%. For year 2 the change in cash flows due to working capital will be:

• A) +10% of sales.
• B) -10% of sales.
• C) +1.1% of sales.
• D) -1.1% of sales.

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Definitions:

Budgetary Control Accounts

Accounting tools used to compare actual financial performance with budgeted amounts, facilitating effective financial management and control.

Budgeted Expenditures

The estimated amount of money allocated for specific expenses in a future period as part of a budgeting process.

Budgeted Revenues

Estimated income that an organization forecasts to receive over a certain period according to its budget plan.

Children's Clubhouse

A facility or program designed to provide recreational, educational, or social activities for children in a safe and engaging environment.