Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  A continuous twelve-month budget results from dropping the month just ended and adding a future month. 
B)  The production budget is derived from the direct materials and direct labor budgets. 
C)  The cash budget shows anticipated cash flows. 
D)  In the budget process for not-for-profit organizations the emphasis is on cash flow rather than on revenue and expenses. 
A)  A continuous twelve-month budget results from dropping the month just ended and adding a future month. 
B)  The production budget is derived from the direct materials and direct labor budgets. 
C)  The cash budget shows anticipated cash flows. 
D)  In the budget process for not-for-profit organizations the emphasis is on cash flow rather than on revenue and expenses.

Question 2

The important end-product of the operating budgets is the

Accepted Answer

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

Question 3

Long-range planning usually encompasses a period of at least

Accepted Answer

A)  six months. 
B)  1 year. 
C)  5 years. 
D)  10 years. 
A)  six months. 
B)  1 year. 
C)  5 years. 
D)  10 years.

Question 4

The most common budget period is

Accepted Answer

A)  one month. 
B)  three months. 
C)  six months. 
D)  one year. 
A)  one month. 
B)  three months. 
C)  six months. 
D)  one year.

Question 5

A sales forecast

Accepted Answer

A)  shows a forecast for the firm only. 
B)  shows a forecast for the industry only. 
C)  shows forecasts for the industry and for the firm. 
D)  plays a minor role in the development of the master budget. 
A)  shows a forecast for the firm only. 
B)  shows a forecast for the industry only. 
C)  shows forecasts for the industry and for the firm. 
D)  plays a minor role in the development of the master budget.

Question 6

Which of the following statements about a budgeted income statement is not true?

Accepted Answer

A)  The budgeted income statement is prepared after the financial budgets are prepared. 
B)  The budgeted income statement is prepared on the accrual basis of accounting. 
C)  The budgeted income statement can be prepared in a multiple-step format. 
D)  The budgeted income statement is prepared using the individual operating budgets. 
A)  The budgeted income statement is prepared after the financial budgets are prepared. 
B)  The budgeted income statement is prepared on the accrual basis of accounting. 
C)  The budgeted income statement can be prepared in a multiple-step format. 
D)  The budgeted income statement is prepared using the individual operating budgets.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A budget is most likely to be effective if

Accepted Answer

A)  it is used to assess blame when things do not occur according to plans. 
B)  it is not used to evaluate a manager's performance. 
C)  employees and managers at the lower levels do not get involved in the budgeting process. 
D)  it has top management support. 
A)  it is used to assess blame when things do not occur according to plans. 
B)  it is not used to evaluate a manager's performance. 
C)  employees and managers at the lower levels do not get involved in the budgeting process. 
D)  it has top management support.

Question 9

During September the capital expenditure budget indicates a $420000 purchase of equipment. The ending September cash balance from operations is budgeted to be $60000. The company wants to maintain a minimum cash balance of $30000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

Accepted Answer

A)  $330000 
B)  $360000 
C)  $450000 
D)  $390000 
A)  $330000 
B)  $360000 
C)  $450000 
D)  $390000

Question 10

In September 2016 the management of Rye Company assembles the following data in preparation of budgeted merchandise purchases for the months of October and November.
1. Expected Sales $$\begin{array} { l r } 
\text { October } & \$ 1,500,000 \
\text { November } & 2,100,000 \
\text { December } & 2,700,000
\end{array}$$ 
2. Cost of goods sold is expected to be 70% of sales.
3. Desired ending merchandise inventory is 20% of the next month's cost of goods sold.
4. The beginning inventory at October 1 will be the desired amount.
Instructions
Compute the budgeted merchandise purchases for October and November. Use a columnar format with separate columns for each month.

Accepted Answer

None

Question 11

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

Accepted Answer

A) True 
 B)False

Question 12

The longer the budget period the more reliable the estimates of future outcomes.

Accepted Answer

A) True 
 B)False

Question 13

The Northeast Regional Division of Union Corp. has been requested to prepare a quarterly budgeted income statement for 2017. The regional manager expects that sales in the first quarter of 2017 will increase by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2017.
The corporate head office has requested that the regional manager maintain an inventory in dollars equal to 25% of the next quarter's sales. Quarterly purchases average 55% of quarterly sales. Budgeted ending inventory on December 31 2016 is $176000. Quarterly salaries are $20000 plus 5% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: $\begin{array}{lr}
\text { Rent expense } & \$ 24,000 \
\text { Depreciation on office equipment } & \$ 12,000 \
\text { Utilities expense } & \$ 3,600 \
\text { Miscellaneous expenses } & 2 \% \text { of sales }
\end{array}$ The income statement for the first quarter of 2016 was as follows:   Instructions
Prepare a budgeted quarterly income statement in tabular form for the first quarter of 2017. (Show computations.)

Accepted Answer

The answer of The Northeast Regional Division of Union Corp....

Question 14

The Sunstate Bank has asked Dell Printing Co. for a budgeted balance sheet for the year ended December 31 2016. The following information is available:
1. The cash budget shows an expected cash balance of $75000 at December 31 2016.
2. The 2016 sales budget shows total annual sales of $800000. All sales are made on account and accounts receivable at December 31 2016 are expected to be 10% of annual sales.
3. The merchandise purchases budget shows budgeted cost of goods sold for 2016 of $600000 and ending merchandise inventory of $95000. 20% of the ending inventory is expected to have not yet been paid at December 31 2016.
4. The December 31 2015 balance sheet includes the following balances: Equipment $294000 Accumulated Depreciation $122000 Common Stock $270000 and Retained Earnings $48000.
5. The budgeted income statement for 2016 includes the following: depreciation on equipment $15000 federal income taxes $21000 and net income $49000. The income taxes will not be paid until 2013.
6. In 2013 management does not expect to purchase additional equipment or to declare any dividends. It does expect to pay all operating expenses other than depreciation in cash.
Instructions
Prepare an unclassified budgeted balance sheet at December 31 2016.

Accepted Answer

The answer of The Sunstate Bank has asked Dell Printing...

Question 15

Plack Company budgeted the following information for 2013: $\begin{array}{llll}
&\text { May}&\text { June } &\text { July }\
\text { Budgeted purchases } & \$ 104,000 & \$ 110,000 & \$ 102,000
\end{array}$
$\bullet$Cost of goods sold is 40% of sales. Accounts payable is used only for inventory acquisitions.
$\bullet$Plack purchases and pays for merchandise 60% in the month of acquisition and 40% in the following month.
$\bullet$Selling and administrative expenses are budgeted at $30000 for May and are expected to increase 5% per month. They are paid during the month of acquisition. In addition budgeted depreciation is $10000 per month.
$\bullet$Income taxes are $38400 for July and are paid in the month incurred.
Instructions
Compute the amount of budgeted cash disbursements for July.

Accepted Answer

None

Question 16

The following information was taken from Southgate Industry's cash budget for the month of July: $$\begin{array} { l r } 
\text { Beginning cash balance } & \$ 480,000 \
\text { Cash receipts } & 304,000 \
\text { Cash disbursements } & 544,000
\end{array}$$ If the company has a policy of maintaining a minimum end of the month cash balance of $400000 the amount the company would have to borrow is

Accepted Answer

A)  $160000. 
B)  $80000. 
C)  $240000. 
D)  $96000. 
A)  $160000. 
B)  $80000. 
C)  $240000. 
D)  $96000.

Question 17

The following information is taken from the production budget for the first quarter: $$\begin{array} { l r } 
\text { Beginning inventory in units } & 1,200 \
\text { Sales budgeted for the quarter } & 456,000 \
\text { Production capacity in units } & 472,000
\end{array}$$ How many finished goods units should be produced during the quarter if the company desires 3200 units available to start the next quarter?

Accepted Answer

A)  458000 
B)  454000 
C)  474000 
D)  459200 
A)  458000 
B)  454000 
C)  474000 
D)  459200

Question 18

Garnett Co. expects to purchase $180000 of materials in July and $210000 of materials in August. 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. How much will August's cash disbursements for materials purchases be?

Accepted Answer

A)  $135000 
B)  $157500 
C)  $202500 
D)  $210000 
A)  $135000 
B)  $157500 
C)  $202500 
D)  $210000

Question 19

In the direct materials budget the quantity of direct materials to be purchased is computed by adding direct materials required for production to

Accepted Answer

A)  desired ending direct materials. 
B)  beginning direct materials. 
C)  desired ending direct materials less beginning direct materials. 
D)  beginning direct materials less desired ending direct materials. 
A)  desired ending direct materials. 
B)  beginning direct materials. 
C)  desired ending direct materials less beginning direct materials. 
D)  beginning direct materials less desired ending direct materials.

Question 20

Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of specific results to be achieved.

Accepted Answer

A) True 
 B)False

Which of the following statements is incorrect?

The important end-product of the operating budgets is the

Long-range planning usually encompasses a period of at least

The most common budget period is

A sales forecast

Which of the following statements about a budgeted income statement is not true?

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

A budget is most likely to be effective if

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

The longer the budget period the more reliable the estimates of future outcomes.

In the direct materials budget the quantity of direct materials to be purchased is computed by adding direct materials required for production to

Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of specific results to be achieved.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

Exam 23: Budgetary Planning

Which of the following statements is incorrect?

The important end-product of the operating budgets is the

Long-range planning usually encompasses a period of at least

The most common budget period is

A sales forecast

Which of the following statements about a budgeted income statement is not true?

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

A budget is most likely to be effective if

If a monthly cash budget is prepared properly there will never be a cash deficiency at the end of any month.

The longer the budget period the more reliable the estimates of future outcomes.

In the direct materials budget the quantity of direct materials to be purchased is computed by adding direct materials required for production to

Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of specific results to be achieved.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters