True or False. Liquidity refers to the ability of the company to pay maturing obligations. The current assets of the company are compared against the current liabilities to determine its paying capacity.

True or False. Statement of Financial Position (Balance Sheet) provides information regarding the liquidity and revenue generated of the company as of a given date.

True or False. Statement of Profit or Loss otherwise known as balance sheet. It provides information regarding the revenue or sales, expenses and net income of the company over a given accounting period. This accounting period may be month, a quarter of a year.

True or False. Statement of Cash Flows provides an explanation regarding the change in cash balance from one accounting period to another. Cash flows are classified into three main categories: operating, investing and finance.

True or False. Statement of Changes in Equity provides information that explains changes in the stockholders’ equity account from one accounting period to another.

True or False. Management planning is about setting the goals of the organization and identifying ways to achieve them. This may be broken down into long-term plans and short-term plans.

True or False. Short-term goals can be for a year; medium term goals can be between one to three months; and long-term goals can be five to ten years or even longer.

True of False. Resources includes production capacity, human resources who will maintain the operation and financial resources.

True or False. Management must establish mechanism which will allow plans to be monitored. This can be done through quantified plans such as budgets and projected financial statements.

True or False. The most important financial statement account in forecasting is sales because almost all other accounts in the financial statements are affected by sales.

True or False. The following external factors should be looked into in setting sales forecast assumptions: gross domestic product (GDP) growth rate, interest rate, foreign exchange rate, income tax rates, inflation, competition, economic crisis, regulatory environment, and political crisis.

True or False. Production budget is a schedule which provides information regarding the number of units that should be produced over a given accounting period based on expected expenses and targeted level of ending inventories.

True or False. In making financial projections, always start with the statement of profit or loss and the most important account to forecast first is sales

True or False. To forecast net income, there should be information on income taxes and how much financing cost a company will have.

True or False. Working capital refers to the current assets used in the operations of the business.

True or False. Capital structure provides information regarding the amount of assets financed by debt or liabilities and equity.

True or False. The notes to financial statements are integral part of the financial statements.

True or False. Statement of Financial Position (Balance Sheet) provides information regarding the liquidity and capital structure of the company as of a given date.

True or False. Vision describes what top managers want their company to become while mission describes how the company will achieve its vision and makes the purpose and objectives of the company clear.

True or False. Mission describes what top managers want their company to become while vision describes how the company will achieve its vision and makes the purpose and objectives of the company clear.

True or False. These are alternative plans to minimize the adverse effects on the company when the assumptions made do not become realities.

True or False. Balance sheet items that may vary with sales or will be highly correlated with sales are cash, accounts receivable, inventories, accounts payable, and accrued expenses payable.

True or False. Statement of Profit or Loss otherwise known as income statement. It provides information regarding the revenue or sales, expenses and net income of the company over a given accounting period. This accounting period may be month, a quarter of a year.

True or False. Cash is the most liquid asset of a company but it is also the asset most vulnerable to theft.

True or False. A basic internal control system should not allow the assignment of custodial function and recording function to one person, unless you are the owner.