A Stretch Budget Is a Budget That ________

question 136

Multiple Choice

A stretch budget is a budget that ________.

• A) crosses more than one responsibility center
• B) represents a challenging, but achievable level of performance
• C) is impossible to implement in a cost center
• D) is designed to include the effects of exchange rate fluctuations

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Definitions:

Receivables Turnover Ratio

A financial ratio indicating how efficiently a company collects on its accounts receivable, calculated as net credit sales divided by average accounts receivable.

Gross Accounts Receivable

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for, before any deductions for returns or bad debts.

Credit Sales

Credit sales refer to transactions where goods are sold and payment is allowed at a later date, extending credit to the buyer.

Current Ratio

A financial metric assessing a firm's capacity to settle short-term debts or obligations due within a year, determined by dividing current assets by current liabilities.