Exercise 1 True or False Name. Score: Section. Financial Planning and Budgeting Instruction: Write T if the statement is true and F if it is false. 1. In financial planning, it is always better to think that the future has to be categorized for a short-range plan and long-range plan. 2. Financial planning presents the management's plans in quantitative terms. 3. A financial plan that is prepared for the next accounting period can be a means of 157 communicating the company's objectives to the external parties. 4. In financial planning, the zero-based approach is a traditional approach in budgeting . 5. In financial planning, coordination becomes an important tool in enhancing and measuring the performance of the company. 6. The master plan is used as a control measure to determine if the set objectives are attained. 7. The budget preparation is done in a sequential manner. 8. The next step taken after the sales budget is the direct labor budget. 9. The short-range planning and long-range planning differ in the emphasis and the time period involved. 10. The manufacturing overhead budget has separate sections for variable and fixed costs. 11. The budgeted income statement indicates the forecasted cash expected from operations. 12. The top management compares the actual results with budgeted results on a periodic basis to provide control in the budgetary system. 13. The selling and administrative expenses budget is part of the financial budget. 14. The beginning balance of cash, cash receipts, cash disbursements, and the ending balance of cash are essential parts of cash budget preparation. 15. Financial planning is based on ideal standards in order to encourage the management and staff to reach for the highest level of performance. 16. XYZ Company wants to maintain its ratios at their existing levels. At this point, they have to maintain a positive sales growth rate of any amount and it will require some amount of external funding. 17. To get full capacity sales, the actual sales should be divided by the percentage of capacity at which noncurrent assets were operated. 18. The (A*/SO) is the capital intensity ratio which represents the ratio of the assets needed to support the needed sales.19. An increase in inventories due to the increase in demand sales normally requires additional financing, unless the increase is matched by an equally large decrease in some other asset. 20. The increase in interest-bearing notes payable under the spontaneous liabilities (L*/SO) helps reduce the additional funds needed