Question 1

The cash budget is prepared before the budgeted balance sheet is prepared.

Accepted Answer

A) True 
 B)False

Question 2

The master budget is the set of budgeted financial statements and supporting schedules in the entire organization.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following alternatives reflect the proper order of preparing components of the master budget?
1.Financial budget
2.Operating budget
3.Capital expenditures budget

Accepted Answer

A) 1,3,2 
B) 2,3,1 
C) 1,2,3 
D) 3,1,2 
A) 1,3,2 
B) 2,3,1 
C) 1,2,3 
D) 3,1,2

Question 4

Which of the following terms is useful because it compares "actual" revenues and expenses against "budgeted" revenues and expenses?

Accepted Answer

A) Responsibility center 
B) Capital budget 
C) Performance report 
D) Sensitivity analysis 
A) Responsibility center 
B) Capital budget 
C) Performance report 
D) Sensitivity analysis

Question 5

All of the following are functions of the budget committee except

Accepted Answer

A) review the budgets it submits for approval in an organization. 
B) determine the bonuses the organization awards to employees that achieve the target budget. 
C) approve the final budget it expects the organization to implement. 
D) remove unwarranted slack in the workplace. 
A) review the budgets it submits for approval in an organization. 
B) determine the bonuses the organization awards to employees that achieve the target budget. 
C) approve the final budget it expects the organization to implement. 
D) remove unwarranted slack in the workplace.

Question 6

Purchases in May were $60,000,while expected purchases for June and July are $75,000 and $92,000,respectively.All purchases are paid 35% in the month of purchase and 65% in the following month.At what amount are June payments for purchases budgeted?

Accepted Answer

A) $69,750 
B) $65,250 
C) $86,050 
D) $97,450 
A) $69,750 
B) $65,250 
C) $86,050 
D) $97,450

Question 7

The Alec Corporation sells inflatable pools.On June 30,there were 105 pools in ending inventory,and accounts receivable had a balance of $12,000.Sales of inflatable pools (in units)have been budgeted at the following levels for the upcoming months:
   
The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month.The Outdoor Leisure Store sells the inflatable pools for $100 each.The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale,while the remainder is collected in the following month.
Required:
a.Prepare a merchandise purchases budget showing how many pools should be purchased in each of the months including July,August,and September.
b.Prepare a cash collections budget for each of the months including July,August,and September.

Accepted Answer

The answer of The Alec Corporation sells inflatable pools.On June...

Question 8

Fosnight Enterprises prepared the following sales budget:
 
The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the desired beginning inventory on June 1?

Accepted Answer

A) $840 
B) $1,680 
C) $1,960 
D) $9,800 
A) $840 
B) $1,680 
C) $1,960 
D) $9,800

Question 9

Budgets do not provide benchmarks to help managers evaluate performance.

Accepted Answer

A) True 
 B)False

Question 10

Birch Company manufactures coffee makers.The following selected data relates to Birch Company's budgeted sales and inventory levels of the coffee makers for the upcoming quarter.How many coffee makers should Birch Company produce in November? Show your calculations.

Accepted Answer

The answer of Birch Company manufactures coffee makers.The following selected...

Question 11

Cave Hardware's forecasted sales for April,May,June,and July are $200,000,$230,000,$190,000,and $240,000,respectively.Sales are 65% cash and 35% credit with all accounts receivables collected in the month following the sale.Cost of goods sold is 75% of sales and ending inventory is maintained at $60,000 plus 10% of the following month's cost of goods sold.All inventory purchases are paid 22% in the month of purchase and 78% in the following month.
What are the cash collections budgeted for June at Cave Hardware?

Accepted Answer

A) $150,500 
B) $193,500 
C) $123,500 
D) $204,000 
A) $150,500 
B) $193,500 
C) $123,500 
D) $204,000

Question 12

Expected purchases for June and July are $80,000 and $92,000,respectively.Purchases for May were $60,000.All purchases are paid 45% in the month of purchase and 55% the following month.At what amount are June payments for purchases budgeted?

Accepted Answer

A) $69,000 
B) $71,000 
C) $86,600 
D) $110,400 
A) $69,000 
B) $71,000 
C) $86,600 
D) $110,400

Question 13

Which of the following types of cash outlays contains its own budget?

Accepted Answer

A) Capital expenditures 
B) Dividends 
C) Income taxes 
D) All of the above 
A) Capital expenditures 
B) Dividends 
C) Income taxes 
D) All of the above

Question 14

In which of the following company types would the manager combine cost of goods sold,inventory,and purchases into one budget?

Accepted Answer

A) Manufacturing 
B) Merchandising 
C) Service 
D) All of the above 
A) Manufacturing 
B) Merchandising 
C) Service 
D) All of the above

Question 15

The ________ budget is a component in an operating budget.

Accepted Answer

A) capital expenditure 
B) budgeted balance sheet 
C) production 
D) cash 
A) capital expenditure 
B) budgeted balance sheet 
C) production 
D) cash

Question 16

Which of the following is not included in the operating budget?

Accepted Answer

A) Budgeted income statement 
B) Sales budget 
C) Inventory budget 
D) Budgeted balance sheet 
A) Budgeted income statement 
B) Sales budget 
C) Inventory budget 
D) Budgeted balance sheet

Question 17

________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

Accepted Answer

A) Sensitivity analysis 
B) Ratio analysis 
C) Risk analysis 
D) Strategic analysis 
A) Sensitivity analysis 
B) Ratio analysis 
C) Risk analysis 
D) Strategic analysis

Question 18

Natcher Corporation collects 30% of a month's sales in the month of sale,55% in the month following sale,and 10% in the second month following sale.The company has found that 5% of their sales are uncollectible.Budgeted sales for the upcoming four months are:
 
The amount of cash that will be collected in November is budgeted to be

Accepted Answer

A) $287,500. 
B) $283,000. 
C) $78,000. 
D) $291,500. 
A) $287,500. 
B) $283,000. 
C) $78,000. 
D) $291,500.

Question 19

In which of the following company types does the manager use a "cost of goods sold,inventory,and purchases" budget?

Accepted Answer

A) Merchandising 
B) Manufacturing 
C) Service 
D) All of the above 
A) Merchandising 
B) Manufacturing 
C) Service 
D) All of the above

Question 20

McEwen Company has budgeted the following credit sales during the last four months of the year: September,$16,000;October,$22,000;November $21,000;December,$24,000.Experience has shown that payment for the credit sales is received as follows: 20% in the month of sale,55% in the first month after sale,20% in the second month after sale,and 5% uncollectible.How much cash can McEwen Company expect to collect in November as a result of credit sales?

Accepted Answer

A) $15,300 
B) $19,500 
C) $16,300 
D) $19,750 
A) $15,300 
B) $19,500 
C) $16,300 
D) $19,750

The cash budget is prepared before the budgeted balance sheet is prepared.

The master budget is the set of budgeted financial statements and supporting schedules in the entire organization.

Which of the following alternatives reflect the proper order of preparing components of the master budget? 1.Financial budget 2.Operating budget 3.Capital expenditures budget

Which of the following terms is useful because it compares "actual" revenues and expenses against "budgeted" revenues and expenses?

All of the following are functions of the budget committee except

Purchases in May were $60,000,while expected purchases for June and July are $75,000 and $92,000,respectively.All purchases are paid 35% in the month of purchase and 65% in the following month.At what amount are June payments for purchases budgeted?

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?

Budgets do not provide benchmarks to help managers evaluate performance.

Birch Company manufactures coffee makers.The following selected data relates to Birch Company's budgeted sales and inventory levels of the coffee makers for the upcoming quarter.How many coffee makers should Birch Company produce in November? Show your calculations.

Expected purchases for June and July are $80,000 and $92,000,respectively.Purchases for May were $60,000.All purchases are paid 45% in the month of purchase and 55% the following month.At what amount are June payments for purchases budgeted?

Which of the following types of cash outlays contains its own budget?

In which of the following company types would the manager combine cost of goods sold,inventory,and purchases into one budget?

The ________ budget is a component in an operating budget.

Which of the following is not included in the operating budget?

________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

In which of the following company types does the manager use a "cost of goods sold,inventory,and purchases" budget?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 9: The Master Budget

The cash budget is prepared before the budgeted balance sheet is prepared.

The master budget is the set of budgeted financial statements and supporting schedules in the entire organization.

Which of the following alternatives reflect the proper order of preparing components of the master budget? 1.Financial budget 2.Operating budget 3.Capital expenditures budget

Which of the following terms is useful because it compares "actual" revenues and expenses against "budgeted" revenues and expenses?

All of the following are functions of the budget committee except

Purchases in May were $60,000,while expected purchases for June and July are $75,000 and $92,000,respectively.All purchases are paid 35% in the month of purchase and 65% in the following month.At what amount are June payments for purchases budgeted?

Fosnight Enterprises prepared the following sales budget: The expected gross profit rate is 30% and the inventory at the end of February was $10,000.Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the desired beginning inventory on June 1?

Budgets do not provide benchmarks to help managers evaluate performance.

Birch Company manufactures coffee makers.The following selected data relates to Birch Company's budgeted sales and inventory levels of the coffee makers for the upcoming quarter.How many coffee makers should Birch Company produce in November? Show your calculations.

Expected purchases for June and July are $80,000 and $92,000,respectively.Purchases for May were $60,000.All purchases are paid 45% in the month of purchase and 55% the following month.At what amount are June payments for purchases budgeted?

Which of the following types of cash outlays contains its own budget?

In which of the following company types would the manager combine cost of goods sold,inventory,and purchases into one budget?

The ________ budget is a component in an operating budget.

Which of the following is not included in the operating budget?

________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

In which of the following company types does the manager use a "cost of goods sold,inventory,and purchases" budget?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters