Cashflow Forecasting
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Questions and Answers

Which ratio measures the liquidity risk of a business and its ability to generate cash to meet short-term financial commitments?

  • Debt to Equity Ratio
  • Overhead Rate
  • Labour Multiplier
  • Current Ratio (correct)

    • Which ratio measures whether a business is comfortable handling its debt obligations?

  • Current Ratio
  • Labour Multiplier
  • Debt to Equity Ratio (correct)
  • Overhead Rate

    • What is the formula for the current ratio?

  • Net revenue divided by direct labour costs
  • Current assets divided by current liabilities (correct)
  • Total overhead including indirect labour divided by direct labour costs
  • Total liabilities divided by shareholders’ equity

    • What is the formula for the profit margin?

    <p>Net profit divided by net revenue x 100</p> Signup and view all the answers

    Which of the following is the primary goal of financial management in an architectural practice?

    <p>To achieve and sustain profits</p> Signup and view all the answers

    What is the formula for calculating profit in a business?

    <p>Revenue minus expenses</p> Signup and view all the answers

    What is the purpose of setting aside a percentage of profit as a capital reserve?

    <p>To cover expenses in lean years</p> Signup and view all the answers

    Why is financial planning important in an architectural practice?

    <p>To guide strategic decisions</p> Signup and view all the answers

    Which of the following statements accurately describes the Average Collection Period (ACP)?

    <p>ACP measures the average number of days it takes to receive payment from the invoice date.</p> Signup and view all the answers

    Which of the following is a component of the Balance Sheet?

    <p>Current Assets</p> Signup and view all the answers

    What does the term 'Accounts Payable' refer to?

    <p>A record of accounts of money payable to consultants and to other suppliers for expenses.</p> Signup and view all the answers

    Which type of accounting is done within the architectural practice?

    <p>Internal accounting</p> Signup and view all the answers

    Which type of accounting includes the preparation and examination of financial statements to express an opinion on the financial position of the practice?

    <p>External accounting</p> Signup and view all the answers

    What is the highest level of assurance provided by an external accountant?

    <p>Audit</p> Signup and view all the answers

    Which accounting system records all income and expenses as they occur in the general ledger?

    <p>Accrual system</p> Signup and view all the answers

    Which financial statement shows the financial position of a company at a given period?

    <p>Balance Sheet</p> Signup and view all the answers

    Which financial statement focuses on profitability and growth?

    <p>Income Statement</p> Signup and view all the answers

    Which financial statement is used to understand how to realize profit into cash?

    <p>Cashflow Statement</p> Signup and view all the answers

    Which financial statement is a detailed explanation of the change in cash on the balance sheet?

    <p>Cashflow Statement</p> Signup and view all the answers

    Which of the following is a reason why a well-prepared cashflow projection may be necessary for negotiating a line of credit with the bank?

    <p>To accurately monitor and control expenses</p> Signup and view all the answers

    What can an accountant provide advice on in relation to banks approving loans and lines of credit?

    <p>Information required by banks</p> Signup and view all the answers

    In what chapter of the text can you find information on various methods of compensation or fee calculation?

    <p>Chapter 3.9 - Architectural Services and Fees</p> Signup and view all the answers

    Which of the following is NOT a responsibility of an accountant in an architect practice?

    <p>Designing architectural plans</p> Signup and view all the answers

    What should be considered when preparing a cashflow forecast?

    <p>The architect's payment history</p> Signup and view all the answers

    What is the role of a Chartered Professional Accountant (CPA) in an architect practice?

    <p>Adhering to professional standards</p> Signup and view all the answers

    When is the best time to negotiate for a line of credit with a bank?

    <p>When financing is not required</p> Signup and view all the answers

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