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Using Accounting Information For Decisions

Using Accounting Information For Decisions

The chief financial officer (CFO) of Flash Bulb and Seed Company has prepared the following projections for the month of August.

Expectedsales                                                                       480,000

Projected monthly resources consumed:
 
Rent                                                                                           $85,000
 
Utlities                                                                                     2,900
 
Wages                                                                                      274,000
 
Advetising                                                                             115,000
 
Repairs                                                                                    12,000
 
Supplies                                                                                  2,500
 
Total cost of resourcesconsumed                           491,400
 
Projectedloss                                                                      $(11,400)
 
Although Flash Bulb and Seed Company predics a loss for August, the CFO is confident that the sales will increase in the future.
 
Why is it important that the CFO prepare a document likethis?
 
If the company came to your bank requesting a loan, how would you respond? From the data given, does the firm appear that it is likley to be able to repay the loan?  Why?

Apr 25 2018 View more View Less

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