Question 1

A budget can be an effective means of communicating management's plans to the employees of a business.

Accepted Answer

A) True 
 B)False

Question 2

The usual budget period is:

Accepted Answer

A) An annual period of 250 working days. 
B) A monthly period separated into daily budgets. 
C) A quarterly period separated into weekly budgets. 
D) An annual period separated into weekly budgets. 
E) An annual period separated into quarterly and monthly budgets. 
A) An annual period of 250 working days. 
B) A monthly period separated into daily budgets. 
C) A quarterly period separated into weekly budgets. 
D) An annual period separated into weekly budgets. 
E) An annual period separated into quarterly and monthly budgets.

Question 3

A plan showing the planned sales units and the revenue to be derived from these sales,and is the usual starting point in the budgeting process,is called the:

Accepted Answer

A) Operating budget. 
B) Business plan. 
C) Income statement budget. 
D) Merchandise purchases budget. 
E) Sales budget. 
A) Operating budget. 
B) Business plan. 
C) Income statement budget. 
D) Merchandise purchases budget. 
E) Sales budget.

Question 4

In preparing financial budgets:

Accepted Answer

A) The budgeted balance sheet is usually prepared last. 
B) The cash budget is usually not prepared. 
C) The budgeted income statement is usually not prepared. 
D) The capital expenditures budget is usually prepared last. 
E) The merchandise purchases budget is the key budget. 
A) The budgeted balance sheet is usually prepared last. 
B) The cash budget is usually not prepared. 
C) The budgeted income statement is usually not prepared. 
D) The capital expenditures budget is usually prepared last. 
E) The merchandise purchases budget is the key budget.

Question 5

Which of the following is not a result of following a well-designed budgeting process?

Accepted Answer

A) Improved decision-making processes. 
B) Improved performance evaluations. 
C) Improved coordination of business activities. 
D) Assurance of future profits. 
E) All of these are benefits of effective budgeting. 
A) Improved decision-making processes. 
B) Improved performance evaluations. 
C) Improved coordination of business activities. 
D) Assurance of future profits. 
E) All of these are benefits of effective budgeting.

Question 6

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales.It estimates that May's ending inventory will consist of 20,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Compute the number of units to be produced that would appear on the company's production budget for the month of June.

Accepted Answer

A) 288,000. 
B) 260,000. 
C) 289,000. 
D) 280,000. 
E) 309,000. 
A) 288,000. 
B) 260,000. 
C) 289,000. 
D) 280,000. 
E) 309,000.

Question 7

The merchandise purchases budget depends on information provided by the sales budget.

Accepted Answer

A) True 
 B)False

Question 8

In preparing a budgeted balance sheet,the amount for Accounts Receivable is primarily determined from:

Accepted Answer

A) The purchases budget. 
B) The sales budget. 
C) The capital expenditures budget. 
D) The budgeted income statement. 
E) The selling expenses budget. 
A) The purchases budget. 
B) The sales budget. 
C) The capital expenditures budget. 
D) The budgeted income statement. 
E) The selling expenses budget.

Question 9

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting are called:

Accepted Answer

A) Production budgets. 
B) Sales budgets. 
C) Cash budgets. 
D) Rolling budgets. 
E) Capital expenditures budgets. 
A) Production budgets. 
B) Sales budgets. 
C) Cash budgets. 
D) Rolling budgets. 
E) Capital expenditures budgets.

Question 10

Activity-based budgeting is a budget system based on expected activities and their activity levels,which helps management plan for the resources required.

Accepted Answer

A) True 
 B)False

Question 11

Sweeny Co.is preparing a cash budget for the second quarter of the coming year.The following data have been forecasted:
   Additional data:
(1)Sales are 40% cash and 60% credit.The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter.Total sales in March were $125,000.
(2)Purchases are all on credit,with 40% paid in the month of purchase and the balance paid in the following month.
(3)Operating expenses are paid in the month they are incurred.
(4)A minimum cash balance of $40,000 is required at the end of each month.
(5)Loans are used to maintain the minimum cash balance.At the end of each month,interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month.Repayments are made whenever excess cash is available.
Prepare the company's cash budget for May.Show the ending loan balance at May 31.

Accepted Answer

The answer of Sweeny Co.is preparing a cash budget for...

Question 12

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for the fourth quarter should be:

Accepted Answer

A) $134,000. 
B) $109,000. 
C) $ 91,500. 
D) $ 25,000. 
E) $ 91,000. 
A) $134,000. 
B) $109,000. 
C) $ 91,500. 
D) $ 25,000. 
E) $ 91,000.

Question 13

Budgets are normally more effective when all levels of management are involved in the budgeting process.

Accepted Answer

A) True 
 B)False

Question 14

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

Accepted Answer

A) Sales budget. 
B) Operating budget. 
C) Capital expenditures budget. 
D) Selling expense budget. 
E) Purchases budget. 
A) Sales budget. 
B) Operating budget. 
C) Capital expenditures budget. 
D) Selling expense budget. 
E) Purchases budget.

Question 15

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

Accepted Answer

A) True 
 B)False

Question 16

A ________________________ is a continuously revised budget that adds future months or quarters to replace months or quarters that have lapsed.

Accepted Answer

The answer of A ________________________ is a continuously revised budget...

Question 17

A capital expenditures budget is prepared before the operating budgets.

Accepted Answer

A) True 
 B)False

Question 18

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Accepted Answer

A) Traditional budgeting. 
B) Management budgeting. 
C) Master budgeting. 
D) Activity-based budgeting. 
E) Cash budgeting. 
A) Traditional budgeting. 
B) Management budgeting. 
C) Master budgeting. 
D) Activity-based budgeting. 
E) Cash budgeting.

Question 19

Which of the following would not be used in preparing a cash budget for October?

Accepted Answer

A) Beginning cash balance on October 1. 
B) Budgeted sales and collections for October. 
C) Estimated depreciation expense for October. 
D) Budgeted salaries expense for October. 
E) Budgeted capital equipment purchases for October. 
A) Beginning cash balance on October 1. 
B) Budgeted sales and collections for October. 
C) Estimated depreciation expense for October. 
D) Budgeted salaries expense for October. 
E) Budgeted capital equipment purchases for October.

Question 20

When preparing the cash budget,all the following should be considered except:

Accepted Answer

A) Cash receipts from customers. 
B) Cash payments for merchandise. 
C) Depreciation expense. 
D) Cash payments for income taxes. 
E) Cash payments for capital expenditures. 
A) Cash receipts from customers. 
B) Cash payments for merchandise. 
C) Depreciation expense. 
D) Cash payments for income taxes. 
E) Cash payments for capital expenditures.

Exam 22: Master Budgets and Planning

A budget can be an effective means of communicating management's plans to the employees of a business.

The usual budget period is:

A plan showing the planned sales units and the revenue to be derived from these sales,and is the usual starting point in the budgeting process,is called the:

In preparing financial budgets:

Which of the following is not a result of following a well-designed budgeting process?

The merchandise purchases budget depends on information provided by the sales budget.

In preparing a budgeted balance sheet,the amount for Accounts Receivable is primarily determined from:

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting are called:

Activity-based budgeting is a budget system based on expected activities and their activity levels,which helps management plan for the resources required.

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for the fourth quarter should be:

Budgets are normally more effective when all levels of management are involved in the budgeting process.

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

A ________________________ is a continuously revised budget that adds future months or quarters to replace months or quarters that have lapsed.

A capital expenditures budget is prepared before the operating budgets.

A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:

Which of the following would not be used in preparing a cash budget for October?

When preparing the cash budget,all the following should be considered except:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters