Multiple Choice Questions: Attempt all three.

1. A cash budget is:

1. Beginning cash balance Cash receipts Cash from financing Cash disbursements Ending cash balance.
2. Beginning cash balance Cash receipts Cash disbursements Financing Ending cash balance.
3. Beginning cash balance Net income Cash dividends Ending cash balance.
4. Beginning cash balance Cash revenues Cash expenses Ending cash balance.

2- XYZ Industries is considering two capital budgeting projects. Project A requires an initial investment of $48,000. It is expected to produce net annual cash flows of $7,000. Project B requires an initial investment of $75,000 and is expected to produce net annual cash flows of $12,000. Using the cash payback technique to evaluate the two projects, Siegel should accept:

1. Project A because it has a shorter cash payback period.
2. Project B because it has a shorter cash payback period.
3. Project A because it requires a smaller initial investment.
4. Project B because it produces a larger net annual cash flow.

3- Which of the following statement regarding graphs of fixed and variable cost is true?

1. Variable costs can be represented by a straight line where costs are the same for each data point.
2. Fixed costs can be represented by a straight line starting at the origin and continuing through each data point.
3. Fixed costs are zero when production is equal to zero.
4. Variable costs are zero when production is equal to zero.
5. Fixed and Variable costs are curvilinear form above zero on the Y axis.