HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)

Finance Basics

96

Step 3. Determine whether and how your bot-

tom line will be affected by any variances.

a. Assess your company’s capital

expenditures.

b. Revise your forecast for the coming

quarter.

c. Determine positive and negative variances

compared with budget.

Answers to test questions

1: a. With accrual accounting, costs are matched

to the associated sales, regardless of whether cash is

actually received or paid in that period. By matching

expenses with revenues in the same time period, ac-

crual accounting helps managers understand how

profi table a company’s products or services are.

2: d. Assembly labor costs are considered part of

COGS. Cost of goods sold includes the materials, la-

H6416.indb 96H6416.indb 96 12/19/13 9:41 AM12/19/13 ...