Question 1

The budget committee has the responsibility for coordinating the preparation of the budget.

Accepted Answer

A) True 
 B)False

Question 2

The culmination of preparing operating budgets is the

Accepted Answer

A) budgeted balance sheet. 
B) production budget. 
C) cash budget. 
D) budgeted income statement. 
A) budgeted balance sheet. 
B) production budget. 
C) cash budget. 
D) budgeted income statement.

Question 3

Which one of the following is a problem resulting from a service company being overstaffed?

Accepted Answer

A) Labor costs will be disproportionately low. 
B) Profits will be higher because of the additional salaries. 
C) Staff turnover may increase. 
D) Revenue may be lost. 
A) Labor costs will be disproportionately low. 
B) Profits will be higher because of the additional salaries. 
C) Staff turnover may increase. 
D) Revenue may be lost.

Question 4

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

Accepted Answer

A) True 
 B)False

Question 5

Dex Industries expects to purchase $120,000 of materials in March and $140,000 of materials in April. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. In addition, a 2% discount is received for payments made in the month of purchase. How much will April's cash disbursements for materials purchases be?

Accepted Answer

A) $88,200 
B) $108,200 
C) $132,900 
D) $120,000 
A) $88,200 
B) $108,200 
C) $132,900 
D) $120,000

Question 6

In order to develop a budgeted balance sheet, the previous year's balance sheet is needed.

Accepted Answer

A) True 
 B)False

Question 7

It is important that budgets be accepted by

Accepted Answer

A) division managers only. 
B) department heads only. 
C) supervisors only. 
D) All of these answers are correct. 
A) division managers only. 
B) department heads only. 
C) supervisors only. 
D) All of these answers are correct.

Question 8

A budget

Accepted Answer

A) is a substitute for management. 
B) is an aid to management. 
C) can operate or enforce itself. 
D) is the responsibility of the accounting department. 
A) is a substitute for management. 
B) is an aid to management. 
C) can operate or enforce itself. 
D) is the responsibility of the accounting department.

Question 9

The direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials units.

Accepted Answer

A) True 
 B)False

Question 10

Effective budgeting requires clearly defined lines of authority and responsibility.

Accepted Answer

A) True 
 B)False

Question 11

The flow of input data for budgeting should be from the highest levels of responsibility to the lowest.

Accepted Answer

A) True 
 B)False

Question 12

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: $$\begin{array} { l r } 
\text { January } & \$ 360,000 \
\text { February } & 216,000 \
\text { March } & 540,000
\end{array}$$ The cash inflow in the month of March is expected to be

Accepted Answer

A) $406,800. 
B) $307,800. 
C) $324,000. 
D) $388,800. 
A) $406,800. 
B) $307,800. 
C) $324,000. 
D) $388,800.

Question 13

The direct materials and direct labor budgets provide information for preparing the

Accepted Answer

A) sales budget. 
B) production budget. 
C) manufacturing overhead budget. 
D) cash budget. 
A) sales budget. 
B) production budget. 
C) manufacturing overhead budget. 
D) cash budget.

Question 14

Which one of the following is not a benefit of budgeting?

Accepted Answer

A) It facilitates the coordination of activities. 
B) It provides definite objectives for evaluating performance. 
C) It provides assurance that the company will achieve its objectives. 
D) It requires all levels of management to plan ahead on a recurring basis. 
A) It facilitates the coordination of activities. 
B) It provides definite objectives for evaluating performance. 
C) It provides assurance that the company will achieve its objectives. 
D) It requires all levels of management to plan ahead on a recurring basis.

Question 15

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

Accepted Answer

A) True 
 B)False

Question 16

Bear, Inc. estimates its sales at 200,000 units in the first quarter and that sales will increase by 20,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.
Production in units for the third quarter should be budgeted at

Accepted Answer

A) 245,000. 
B) 230,000. 
C) 305,000. 
D) 240,000. 
A) 245,000. 
B) 230,000. 
C) 305,000. 
D) 240,000.

Question 17

The budgeted balance sheet is prepared entirely from the budgets for the current year.

Accepted Answer

A) True 
 B)False

Question 18

Budgets are statements of management's plans stated in financial terms.

Accepted Answer

A) True 
 B)False

Question 19

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

Accepted Answer

A) 308 
B) 332 
C) 320 
D) 356 
A) 308 
B) 332 
C) 320 
D) 356

Question 20

The master budget consists of operating and financial budgets.

Accepted Answer

A) True 
 B)False

The budget committee has the responsibility for coordinating the preparation of the budget.

The culmination of preparing operating budgets is the

Which one of the following is a problem resulting from a service company being overstaffed?

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

In order to develop a budgeted balance sheet, the previous year's balance sheet is needed.

It is important that budgets be accepted by

A budget

The direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials units.

Effective budgeting requires clearly defined lines of authority and responsibility.

The flow of input data for budgeting should be from the highest levels of responsibility to the lowest.

The direct materials and direct labor budgets provide information for preparing the

Which one of the following is not a benefit of budgeting?

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

The budgeted balance sheet is prepared entirely from the budgets for the current year.

Budgets are statements of management's plans stated in financial terms.

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

The master budget consists of operating and financial budgets.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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Exam 20: Budgetary Planning

The budget committee has the responsibility for coordinating the preparation of the budget.

The culmination of preparing operating budgets is the

Which one of the following is a problem resulting from a service company being overstaffed?

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

In order to develop a budgeted balance sheet, the previous year's balance sheet is needed.

It is important that budgets be accepted by

A budget

The direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials units.

Effective budgeting requires clearly defined lines of authority and responsibility.

The flow of input data for budgeting should be from the highest levels of responsibility to the lowest.

The direct materials and direct labor budgets provide information for preparing the

Which one of the following is not a benefit of budgeting?

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

The budgeted balance sheet is prepared entirely from the budgets for the current year.

Budgets are statements of management's plans stated in financial terms.

Lorie Nursery plans to sell 320 potted plants during April and 240 units in May. Lorie Nursery keeps 15% of the next month's sales as ending inventory. How many units should Lorie Nursery produce during April?

The master budget consists of operating and financial budgets.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters