Jean Inman- RD exam Domain 3 Topic C: Financial Management questions with correct answers

Operating budget Correct Answer-forecast of revenue, expenses and profit for a specific time period *first step- forecast sales or revenue, then budget expenses related to the projected level of revenue Cash Flow budget Correct Answer-projects revenues and expenses, showing inflow and output of cash overtime, purpose- to determine if funds will be available when needed Capital budget Correct Answer-plant facilities, equipment, cost of improvements and repairs (expensive, long lasting-beyond 1 year) includes expenses for equipment, software & maintenance or service contracts Traditional method to establish budget line items Correct Answer-begins with the year's expenses plus an inflation factor uses existing budget as a base and projects changes for the year ZBB Correct Answer-Zero-based budget: starts at 0. Must justify each anticipated expense- needs more planning Fixed budget Correct Answer-prepared at one level of sales or revenue, no anticipated changes in patient or customer count Flexible budget Correct Answer-adjusted to various levels of operation with varying levels of sales or revenues throughout t