Question 1

Budget development for the coming year usually starts

Accepted Answer

A)  a year in advance. 
B)  the first month of the year to be budgeted. 
C)  several months before the end of the current year. 
D)  the last month of the previous year. 
A)  a year in advance. 
B)  the first month of the year to be budgeted. 
C)  several months before the end of the current year. 
D)  the last month of the previous year.

Question 2

A budget can be a means of communicating a company's objectives to external parties.

Accepted Answer

A) True 
 B)False

Question 3

During September, the capital expenditure budget indicates a $420,000 purchase of equipment. The ending September cash balance from operations is budgeted to be $60,000. The company wants to maintain a minimum cash balance of $30,000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

Accepted Answer

A)  $330,000 
B)  $360,000 
C)  $450,000 
D)  $390,000 
A)  $330,000 
B)  $360,000 
C)  $450,000 
D)  $390,000

Question 4

The number of direct labor hours needed for production is obtained from the production budget.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements about budget acceptance in an organization is true?

Accepted Answer

A)  The most widely accepted budget by the organization is the one prepared by top management. 
B)  The most widely accepted budget by the organization is the one prepared by the department heads. 
C)  Budgets are hardly ever accepted by anyone except top management. 
D)  Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. 
A)  The most widely accepted budget by the organization is the one prepared by top management. 
B)  The most widely accepted budget by the organization is the one prepared by the department heads. 
C)  Budgets are hardly ever accepted by anyone except top management. 
D)  Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Long-range planning

Accepted Answer

A)  generally presents more detailed information than an annual budget. 
B)  generally encompasses a longer period of time than an annual budget. 
C)  is usually more accurate than an annual budget. 
D)  is prepared on a quarterly basis if the budget is prepared on a quarterly basis. 
A)  generally presents more detailed information than an annual budget. 
B)  generally encompasses a longer period of time than an annual budget. 
C)  is usually more accurate than an annual budget. 
D)  is prepared on a quarterly basis if the budget is prepared on a quarterly basis.

Question 8

A merchandiser has a merchandise purchases budget rather than a production budget.

Accepted Answer

A) True 
 B)False

Question 9

Instead of a production budget, a merchandiser will prepare a

Accepted Answer

A)  pseudo-production budget. 
B)  merchandise purchases budget. 
C)  master time sheet. 
D)  sales forecast. 
A)  pseudo-production budget. 
B)  merchandise purchases budget. 
C)  master time sheet. 
D)  sales forecast.

Question 10

Accounting generally has the responsibility for

Accepted Answer

A)  setting company goals. 
B)  expressing the budget in financial terms. 
C)  enforcing the budget. 
D)  administration of the budget. 
A)  setting company goals. 
B)  expressing the budget in financial terms. 
C)  enforcing the budget. 
D)  administration of the budget.

Question 11

The financial budgets include the

Accepted Answer

A)  cash budget and the selling and administrative expense budget. 
B)  cash budget and the budgeted balance sheet. 
C)  budgeted balance sheet and the budgeted income statement. 
D)  cash budget and the production budget. 
A)  cash budget and the selling and administrative expense budget. 
B)  cash budget and the budgeted balance sheet. 
C)  budgeted balance sheet and the budgeted income statement. 
D)  cash budget and the production budget.

Question 12

The budgeted income statement indicates the expected profitability of operations for the next year.

Accepted Answer

A) True 
 B)False

Question 13

Bean Manufacturing reported the following information for 2019: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { October\quad November \quad December }$
$\text { Budgeted purchases } \quad \$ 240,000 \quad \$ 256,000 \quad \$ 288,000$ Operating expenses are: Salaries, $100,000; Depreciation, $40,000; Rent, $20,000; Utilities, $28,000

-Operating expenses are paid during the month incurred.
-Accounts payable is used only for inventory acquisitions.
How much is the budgeted amount of cash to be paid for operating expenses in November?

Accepted Answer

A)  $404,000 
B)  $148,000 
C)  $188,000 
D)  $444,000 
A)  $404,000 
B)  $148,000 
C)  $188,000 
D)  $444,000

Question 14

Which of the following is done to improve the reliability of the sales forecast?

Accepted Answer

A)  Employ financial planning models 
B)  Lengthen the planning horizon to more than a year 
C)  Rely solely on outside consultants 
D)  Use the sales forecasts from the previous year 
A)  Employ financial planning models 
B)  Lengthen the planning horizon to more than a year 
C)  Rely solely on outside consultants 
D)  Use the sales forecasts from the previous year

Question 15

The total direct labor hours required in preparing a direct labor budget are calculated using the

Accepted Answer

A)  sales forecast. 
B)  production budget. 
C)  direct materials budget. 
D)  sales budget. 
A)  sales forecast. 
B)  production budget. 
C)  direct materials budget. 
D)  sales budget.

Question 16

Dart, Inc. makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: $\begin{array}{lrr}&\text { Variable Cost Per Unit Sold }&\text { Monthly Fixed Cost }\
\text { Sales commissions } & \$ 0.60 & \$ 6,000 \
\text { Shipping } & 1.20 & \
\text { Advertising } & 0.30 &\
\text { Executive salaries } & &40,000 \
\text { Depreciation on office equipment } && 8,000\
\text { Other }&0.35&28,000
\end{array}$ Expenses are paid in the month incurred. If the company has budgeted to sell 8,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

Accepted Answer

A)  $16,800 
B)  $18,400 
C)  $101,600 
D)  $19,600 
A)  $16,800 
B)  $18,400 
C)  $101,600 
D)  $19,600

Question 17

A critical factor in budgeting for a service firm is to

Accepted Answer

A)  hire professional staff to perform the budgeting work. 
B)  coordinate professional staff needs with anticipated services. 
C)  classify all personnel as either variable or fixed. 
D)  budget expenditures before anticipated receipts. 
A)  hire professional staff to perform the budgeting work. 
B)  coordinate professional staff needs with anticipated services. 
C)  classify all personnel as either variable or fixed. 
D)  budget expenditures before anticipated receipts.

Question 18

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 19

The budget itself and the administration of the budget are the responsibility of the accounting department.

Accepted Answer

A) True 
 B)False

Question 20

The direct materials budget contains both quantity and cost data.

Accepted Answer

A) True 
 B)False

Budget development for the coming year usually starts

A budget can be a means of communicating a company's objectives to external parties.

The number of direct labor hours needed for production is obtained from the production budget.

Which of the following statements about budget acceptance in an organization is true?

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

Long-range planning

A merchandiser has a merchandise purchases budget rather than a production budget.

Instead of a production budget, a merchandiser will prepare a

Accounting generally has the responsibility for

The financial budgets include the

The budgeted income statement indicates the expected profitability of operations for the next year.

Which of the following is done to improve the reliability of the sales forecast?

The total direct labor hours required in preparing a direct labor budget are calculated using the

A critical factor in budgeting for a service firm is to

The budget itself and the administration of the budget are the responsibility of the accounting department.

The direct materials budget contains both quantity and cost data.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 9: Budgetary Planning

Budget development for the coming year usually starts

A budget can be a means of communicating a company's objectives to external parties.

The number of direct labor hours needed for production is obtained from the production budget.

Which of the following statements about budget acceptance in an organization is true?

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

Long-range planning

A merchandiser has a merchandise purchases budget rather than a production budget.

Instead of a production budget, a merchandiser will prepare a

Accounting generally has the responsibility for

The financial budgets include the

The budgeted income statement indicates the expected profitability of operations for the next year.

Which of the following is done to improve the reliability of the sales forecast?

The total direct labor hours required in preparing a direct labor budget are calculated using the

A critical factor in budgeting for a service firm is to

The budget itself and the administration of the budget are the responsibility of the accounting department.

The direct materials budget contains both quantity and cost data.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters