Question 1

Which of the following is a

Accepted Answer

A)  Pro forma financial statements are based on the company's budgets. 
B)  Companies prepare pro forma financial statements to show how their performance for the period will "look" if actual results match the budget. 
C)  Companies usually prepare a pro forma income statement,pro forma balance sheet,and pro forma statement of cash flows. 
D)  All of the answers are correct. 
A)  Pro forma financial statements are based on the company's budgets. 
B)  Companies prepare pro forma financial statements to show how their performance for the period will "look" if actual results match the budget. 
C)  Companies usually prepare a pro forma income statement,pro forma balance sheet,and pro forma statement of cash flows. 
D)  All of the answers are correct.

Question 2

Valley Farm Supply started the period with $80,000 cash.Cash receipts for January expected to total $350,000.Cash disbursements for January were expected to be $290,000.What is the expected cash balance at the end of January?

Accepted Answer

A)  $290,000 
B)  $350,000 
C)  $80,000 
D)  $140,000 
A)  $290,000 
B)  $350,000 
C)  $80,000 
D)  $140,000

Question 3

A management accountant was working on a cash budget for Oklahoma Company when he accidentally spilled his coffee.Some of the liquid splattered on his working papers rendering a few of the amounts illegible.The budget with missing amounts indicated is provided below
:   CHANGE NEEDS TO BE MADE TO TABLE
Remove the ",2014" from the heading
The company desires a cash cushion of $7,500 to start each month.In any month in which there is cash shortage the company's bank will extend it a loan equal to the shortage amount.The loan is assumed to have been made on the last day of the month.Any time the company has a cash surplus it must repay as much of any outstanding loans as possible.The bank charges monthly interest of 1% on any outstanding loan balance.
Required:
Compute the missing amounts and enter them in the following table: $\begin{array}{|l|l|l|l|}
\hline(\mathrm{a}) & \quad\quad \quad & (\mathrm{i}) & \quad\quad\quad \
\hline \text { (b) } && (j) &  \
\hline \text { (c) } &  & (\mathrm{k}) &  \
\hline \text { (d) } &  & (\mathrm{l}) &  \
\hline \text { (e) } & & (\mathrm{m}) &  \
\hline \text { (f) } &  & (\mathrm{n}) & \
\hline(\mathrm{g}) && (\mathrm{o}) &  \
\hline(\mathrm{h}) &  & (\mathrm{p}) &  \
\hline
\end{array}$

Accepted Answer

None

Question 4

Select the correct statement about budgeting and human behavior.

Accepted Answer

A)  People are usually very comfortable with budgets. 
B)  The attitudes of upper managers significantly impact budget effectiveness. 
C)  Budgets increase individual freedom within an organization. 
D)  Participative budgeting contributes to fear and resentment. 
A)  People are usually very comfortable with budgets. 
B)  The attitudes of upper managers significantly impact budget effectiveness. 
C)  Budgets increase individual freedom within an organization. 
D)  Participative budgeting contributes to fear and resentment.

Question 5

Budgeted depreciation expense would not appear on a:

Accepted Answer

A)  Selling and administrative expense budget. 
B)  Budgeted income statement. 
C)  Cash budget. 
D)  All of the answers are correct. 
A)  Selling and administrative expense budget. 
B)  Budgeted income statement. 
C)  Cash budget. 
D)  All of the answers are correct.

Question 6

One company's practice is to provide bonuses to salespeople who exceed their sales targets.Which of the following advantages of budgeting enables the company to establish its recognition program?

Accepted Answer

A)  Planning 
B)  Coordination 
C)  Performance measurement 
D)  Corrective action 
A)  Planning 
B)  Coordination 
C)  Performance measurement 
D)  Corrective action

Question 7

The responsibility for the coordination of a company's budgeting activities normally rests with the Chief Financial Officer (CFO).

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not considered a pro forma financial statement?

Accepted Answer

A)  Sales budget 
B)  Balance sheet 
C)  Cash flow statement 
D)  Income statement 
A)  Sales budget 
B)  Balance sheet 
C)  Cash flow statement 
D)  Income statement

Question 9

Planning concerned with long-range decisions such as defining the scope of the business is referred to as:

Accepted Answer

A)  operations budgeting. 
B)  master planning. 
C)  capital budgeting. 
D)  strategic planning. 
A)  operations budgeting. 
B)  master planning. 
C)  capital budgeting. 
D)  strategic planning.

Question 10

Which of the following is generally included in a sales budget?

Accepted Answer

A)  Schedule of cash receipts for the projected sales 
B)  Desired ending inventory 
C)  Budgeted cost of goods sold 
D)  Schedule of cash payments for inventory purchases 
A)  Schedule of cash receipts for the projected sales 
B)  Desired ending inventory 
C)  Budgeted cost of goods sold 
D)  Schedule of cash payments for inventory purchases

Question 11

Bantam Industries has budgeted the following information for March: $\begin{array}{|l|r|}
\hline \text { Cash receipts }& \$ \quad 271,000\
\hline \text { Beginning cash balance } & 5,000 \
\hline \text { Cash payments } & 280,000 \
\hline \text { Desire dending cash balance } & 25,000\
\hline
\end{array}$ If there is a cash shortage,the company borrows money from the bank.All cash is borrowed at the beginning of the month in $1,000 increments and interest is paid monthly at 1% on the first day of the following month.The company had no debt before March 1st.How much cash will the company need to borrowed in March?

Accepted Answer

A)  $25,000 
B)  $29,000 
C)  The company should not need to borrow any cash in March 
D)  $4,000 
A)  $25,000 
B)  $29,000 
C)  The company should not need to borrow any cash in March 
D)  $4,000

Question 12

The budget director of Mandy's Kitchen Shop has prepared the following sales budget.The company had $50,000 of accounts receivable at January 1.The company normally collects 100 percent of its accounts receivable in the month following the sale.
Required:
(a)Complete the schedule of cash receipts by filling in the missing amounts.What are the total budgeted cash receipts for the first quarter.
(b)Determine the amount of accounts receivable that Mandy's should report on the first quarter pro forma balance sheet.

Accepted Answer

Answers will vary
(a)  
 Total budgeted

Question 13

Which of the following cash budget equations is incorrect?

Accepted Answer

A)  Cash payments + cash receipts = cash requirements 
B)  Beginning cash + cash receipts = total cash available 
C)  Cash payments + cash cushion = total cash needed 
D)  Period one ending cash balance = period two beginning cash balance 
A)  Cash payments + cash receipts = cash requirements 
B)  Beginning cash + cash receipts = total cash available 
C)  Cash payments + cash cushion = total cash needed 
D)  Period one ending cash balance = period two beginning cash balance

Question 14

What would be the required purchases (on account)for December?

Accepted Answer

A)  $47,000 
B)  $50,000 
C)  $53,000 
D)  $60,500 
A)  $47,000 
B)  $50,000 
C)  $53,000 
D)  $60,500

Question 15

Chu Company provided the following information related to its inventory sales and purchases for December Year 1 and the first quarter of Year 2: $\begin{array}{|l|l|r|r|r|}
\hline&  \text { Dec. Year } 1 &\text { Jan. Year } 2 &\text { Feb. Year } 2 & \text { Mar. Year } 2 \
\hline & \text { (Actual)} & \text { (Budgeted)  }& \text { (Budgeted)  }& \text { (Budgeted)  } \
\hline \text {Cost of goods sold } &\$ 80,000 & \$  140,000 & \$ 180,000 & \$ 120,000 \
\hline
\end{array}$ Desired ending inventory levels are 25% of the following month's projected cost of goods sold.Budgeted purchases of inventory in February Year 2 would be:

Accepted Answer

A)  $135,000. 
B)  $165,000. 
C)  $180,000. 
D)  $225,000. 
A)  $135,000. 
B)  $165,000. 
C)  $180,000. 
D)  $225,000.

Question 16

How might a company develop sales estimates to be used in preparing a sales budget?

Accepted Answer

Answers will vary
Sales estimates are li

Question 17

Although only 20 units are on hand at the beginning of the year,World Company plans to sell 100 units during Year 2.Assuming the company desires an ending inventory of 10 units,it should plan to purchase 110 units.

Accepted Answer

A) True 
 B)False

Question 18

The three major components of the master budget are the financial budgets,the capital budgets,and the pro forma financial statements.

Accepted Answer

A) True 
 B)False

Question 19

How much will the cash payments for purchases be in December?

Accepted Answer

A)  $44,500 
B)  $50,000 
C)  $46,000 
D)  $45,500 
A)  $44,500 
B)  $50,000 
C)  $46,000 
D)  $45,500

Question 20

The master budget details:

Accepted Answer

A)  Long-term objectives. 
B)  Intermediate objectives. 
C)  Short-term objectives. 
D)  All of the answers are correct. 
A)  Long-term objectives. 
B)  Intermediate objectives. 
C)  Short-term objectives. 
D)  All of the answers are correct.

Which of the following is a

Valley Farm Supply started the period with $80,000 cash.Cash receipts for January expected to total $350,000.Cash disbursements for January were expected to be $290,000.What is the expected cash balance at the end of January?

Select the correct statement about budgeting and human behavior.

Budgeted depreciation expense would not appear on a:

One company's practice is to provide bonuses to salespeople who exceed their sales targets.Which of the following advantages of budgeting enables the company to establish its recognition program?

The responsibility for the coordination of a company's budgeting activities normally rests with the Chief Financial Officer (CFO).

Which of the following is not considered a pro forma financial statement?

Planning concerned with long-range decisions such as defining the scope of the business is referred to as:

Which of the following is generally included in a sales budget?

Which of the following cash budget equations is incorrect?

What would be the required purchases (on account)for December?

How might a company develop sales estimates to be used in preparing a sales budget?

Although only 20 units are on hand at the beginning of the year,World Company plans to sell 100 units during Year 2.Assuming the company desires an ending inventory of 10 units,it should plan to purchase 110 units.

The three major components of the master budget are the financial budgets,the capital budgets,and the pro forma financial statements.

How much will the cash payments for purchases be in December?

The master budget details:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 7: Planning for Profit and Cost Control

Which of the following is a

Valley Farm Supply started the period with $80,000 cash.Cash receipts for January expected to total $350,000.Cash disbursements for January were expected to be $290,000.What is the expected cash balance at the end of January?

Select the correct statement about budgeting and human behavior.

Budgeted depreciation expense would not appear on a:

One company's practice is to provide bonuses to salespeople who exceed their sales targets.Which of the following advantages of budgeting enables the company to establish its recognition program?

The responsibility for the coordination of a company's budgeting activities normally rests with the Chief Financial Officer (CFO).

Which of the following is not considered a pro forma financial statement?

Planning concerned with long-range decisions such as defining the scope of the business is referred to as:

Which of the following is generally included in a sales budget?

Which of the following cash budget equations is incorrect?

What would be the required purchases (on account)for December?

How might a company develop sales estimates to be used in preparing a sales budget?

Although only 20 units are on hand at the beginning of the year,World Company plans to sell 100 units during Year 2.Assuming the company desires an ending inventory of 10 units,it should plan to purchase 110 units.

The three major components of the master budget are the financial budgets,the capital budgets,and the pro forma financial statements.

How much will the cash payments for purchases be in December?

The master budget details:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters