Question 1

The adverse (unfavourable)variance is:

Accepted Answer

A) Budgeted payment for rent $12,000, actual rent $11,500. 
B) Budgeted payment for interest $1,000, actual interest $1,000. 
C) Budgeted payment for wages $42,000, actual wages $45,000. 
D) Budgeted receipts from accounts receivable $60,000, actual receipts $65,000. 
A) Budgeted payment for rent $12,000, actual rent $11,500. 
B) Budgeted payment for interest $1,000, actual interest $1,000. 
C) Budgeted payment for wages $42,000, actual wages $45,000. 
D) Budgeted receipts from accounts receivable $60,000, actual receipts $65,000.

Question 2

Budget targets should be:

Accepted Answer

A) achievable. 
B) easy. 
C) challenging and achievable. 
D) loose and achievable. 
A) achievable. 
B) easy. 
C) challenging and achievable. 
D) loose and achievable.

Question 3

Which statement about the uses of budgets is not true?

Accepted Answer

A) They can assist in identifying short-term problems. 
B) They can provide a system of authorisation for managers to spend up to a particular limit. 
C) They are mainly used to set prices. 
D) None of the above, i.e., all are true statements. 
A) They can assist in identifying short-term problems. 
B) They can provide a system of authorisation for managers to spend up to a particular limit. 
C) They are mainly used to set prices. 
D) None of the above, i.e., all are true statements.

Question 4

Which budget criticism can be dealt with by adapting and improving budgeting practices?

Accepted Answer

A) Budgets can make people feel undervalued. 
B) Budgets can be seen as a bureaucratic exercise in cost cutting. 
C) Bottom-up budgeting can lead to budget padding to make targets easier to achieve. 
D) All can be dealt with by adapting and improving budgeting practices. 
A) Budgets can make people feel undervalued. 
B) Budgets can be seen as a bureaucratic exercise in cost cutting. 
C) Bottom-up budgeting can lead to budget padding to make targets easier to achieve. 
D) All can be dealt with by adapting and improving budgeting practices.

Question 5

How is a budget best defined?

Accepted Answer

A) as a forecast for a future period of time. 
B) as a prediction for a future period. 
C) as a non-financial plan for a future period of time. 
D) as a financial plan for a future period of time. 
A) as a forecast for a future period of time. 
B) as a prediction for a future period. 
C) as a non-financial plan for a future period of time. 
D) as a financial plan for a future period of time.

Question 6

The master budget would typically consist of a budgeted:

Accepted Answer

A) statement of financial position and statement of cash flows. 
B) statement of comprehensive income, statement of financial position and statement of cash flows. 
C) statement of comprehensive income and statement of financial position. 
D) statement of comprehensive income and statement of cash flows. 
A) statement of financial position and statement of cash flows. 
B) statement of comprehensive income, statement of financial position and statement of cash flows. 
C) statement of comprehensive income and statement of financial position. 
D) statement of comprehensive income and statement of cash flows.

Question 7

How many of the following items would be included in a cash budget?
 ? Dividends paid to shareholders.
? Doubtful debts.
? Purchase of fixed asset for cash.
? Bonus share issue.

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 8

Use the information below to answer the following questions. Jackson Bottle Yard, a recycling glass company, has supplied the following information in relation to their actual sales in 2017 and planned sales for the first quarter of 2018 .

$\begin{array} { l l r r r } & & \text { Cash } & \text { Credit } & \text { Total } \ 2017 \text { Actual Sales for } & \text { November } & 25,000 & 25,000 & 50,000 \ & \text { December } & 35,000 & 40,000 & 75,000 \ 2018 \text { Estimated Sales for } & \text { January } & 15,000 & 20,000 & 35,000 \ & \text { February } & 18,000 & 30,000 & 48,000 \ & \text { March } & 22,000 & 40,000 & 62,000 \end{array}$

Past records ind icate that expected receipts collected from debtors will be: 
60 per cent in the month of sale 
40 percent in the month following the sale
-Refer to the table above. What is the projected cash inflow from accounts receivable in January?

Accepted Answer

A) $43,000. 
B) $15,000. 
C) $20,000. 
D) $28,000. 
A) $43,000. 
B) $15,000. 
C) $20,000. 
D) $28,000.

Question 9

Use the information below to answer the following questions. $\begin{array}{llc}&\text { Flexed Budget for April }&\text { Actual for April }\
\text { Output } & 40,000 \text { units } & 40,000 \text { units } \
\text { Sales } & \$ 500,000 & \$ 400,000 \
\text { Raw materials } & \$ 100,000 & \$ 88,000 \
\text { Labour } & \$ 250,000 & \$ 180,000 \
\text { Overheads } & \$ 325,000 & \$ 375,000
\end{array}$
-Refer to the table above. The adverse (unfavourable)sales variance of $100,000 is best explained by:

Accepted Answer

A) a decrease in price of the units sold. 
B) the sales manager failing to sell the budgeted units. 
C) an increase in expenses. 
D) none of the above. 
A) a decrease in price of the units sold. 
B) the sales manager failing to sell the budgeted units. 
C) an increase in expenses. 
D) none of the above.

Question 10

Use the information below to answer the following questions. Jackson Bottle Yard, a recycling glass company, has supplied the following information in relation to their actual sales in 2017 and planned sales for the first quarter of 2018 .

$\begin{array} { l l r r r } & & \text { Cash } & \text { Credit } & \text { Total } \ 2017 \text { Actual Sales for } & \text { November } & 25,000 & 25,000 & 50,000 \ & \text { December } & 35,000 & 40,000 & 75,000 \ 2018 \text { Estimated Sales for } & \text { January } & 15,000 & 20,000 & 35,000 \ & \text { February } & 18,000 & 30,000 & 48,000 \ & \text { March } & 22,000 & 40,000 & 62,000 \end{array}$

Past records ind icate that expected receipts collected from debtors will be: 
60 per cent in the month of sale 
40 percent in the month following the sale
-Refer to the table above. What is the total cash expected to be collected from all sales in March?

Accepted Answer

A) $50,000. 
B) $58,000. 
C) $62,000. 
D) $36,000. 
A) $50,000. 
B) $58,000. 
C) $62,000. 
D) $36,000.

Question 11

Which outlay does not appear in the cash budget?

Accepted Answer

A) monetary drawings. 
B) repayment of loan. 
C) interest on bank loan. 
D) depreciation. 
A) monetary drawings. 
B) repayment of loan. 
C) interest on bank loan. 
D) depreciation.

Question 12

There is often a limiting factor that stops a business from achieving its objectives to the maximum extent. In most instances the limiting factor is:

Accepted Answer

A) the ability of the business to advertise its products. 
B) the unrealistic goals of production managers. 
C) the unrealistic objectives set by management. 
D) the ability of the business to sell its products. 
A) the ability of the business to advertise its products. 
B) the unrealistic goals of production managers. 
C) the unrealistic objectives set by management. 
D) the ability of the business to sell its products.

Question 13

The Talent Agency had the following estimates for the six months ending 31 December 2018. $\begin{array}{lr}
\text { Cash balance } 1.1 .15 \text { (Overd raft) } & (\$ 9,150) \
\text { Cash receipts from commissions } & \$ 85,000 \
\text { Cash payments for expenses } & 82,300 \
\text { Proceeds from the sale of motor vehicle } & 6,500 \
\text { Borrowing } & 5,000 \
\text { Depreciation on equipment } & 2,600
\end{array}$ The estimated cash balance at 31 December 2018 is:

Accepted Answer

A) $3,450. 
B) $5,050. 
C) $3,950 (overdraft). 
D) $2,100 (overdraft). 
A) $3,450. 
B) $5,050. 
C) $3,950 (overdraft). 
D) $2,100 (overdraft).

Question 14

Use the information below to answer the following questions.
Sales in December were $960,000. Projected sales for the first quarter of 2018 are: $$\begin{array} { l l } 
\text { January } & \$ 1,080,000 \
\text { February } & \$ 1,300,000 \
\text { March } & \$ 1,280,000
\end{array}$$ Sales are 20% cash and 80% on credit. Debtors pay in the month following the sale.
-Refer to the table above. Calculate the cash collected from accounts receivable in the month of February.

Accepted Answer

A) $1,080,000. 
B) $1,200,000. 
C) $960,000. 
D) $864,000. 
A) $1,080,000. 
B) $1,200,000. 
C) $960,000. 
D) $864,000.

Question 15

Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold for the last three months of 2018 is: $$\begin{array} { l r } 
\text { Month } & \text { Sales } \
\hline \text { October } & 10,000 \
\text { November } & 7,000 \
\text { December } & 5,000 \
\text { January } & 6,000
\end{array}$$ Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 30 percent of next month's sales.
-Refer to the table above. What will be the amount of total production for October 2018?

Accepted Answer

A) 9,400 units. 
B) 7,800 units. 
C) 10,100 units. 
D) 8,400 units. 
A) 9,400 units. 
B) 7,800 units. 
C) 10,100 units. 
D) 8,400 units.

Question 16

Use the information below to answer the following questions. $\begin{array}{llc}&\text { Flexed Budget for April }&\text { Actual for April }\
\text { Output } & 40,000 \text { units } & 40,000 \text { units } \
\text { Sales } & \$ 500,000 & \$ 400,000 \
\text { Raw materials } & \$ 100,000 & \$ 88,000 \
\text { Labour } & \$ 250,000 & \$ 180,000 \
\text { Overheads } & \$ 325,000 & \$ 375,000
\end{array}$
-Refer to the table above. Which of these variance calculations is correct for Raw materials, Labour and Overheads respectively? Note: F - Favourable, U - Unfavourable (adverse).

Accepted Answer

A) 12,000U; $70,000F; $50,000U. 
B) $12,000F; $70,000F; $50,000U. 
C) 12,000U; $70,000U; $50,000F. 
D) none of the above. 
A) 12,000U; $70,000F; $50,000U. 
B) $12,000F; $70,000F; $50,000U. 
C) 12,000U; $70,000U; $50,000F. 
D) none of the above.

Question 17

An adverse (unfavourable)labour efficiency variance could be caused by:

Accepted Answer

A) A drop in production. 
B) An increase in the hourly wage rate. 
C) Machine breakdowns. 
D) All of the above. 
A) A drop in production. 
B) An increase in the hourly wage rate. 
C) Machine breakdowns. 
D) All of the above.

Question 18

In which order do the following steps in the budget setting process actually occur? 
i)Co-ordinate the budget.
Ii)Identify the limiting factor.
Iii)Monitor performance relative to budget.

Accepted Answer

A) ii, iii, i. 
B) ii, i, iii. 
C) i, ii, iii. 
D) iii, i, ii. 
A) ii, iii, i. 
B) ii, i, iii. 
C) i, ii, iii. 
D) iii, i, ii.

Question 19

What is the group which oversees the budgeting process within an organisation?

Accepted Answer

A) estimates committee. 
B) board of directors. 
C) budget committee. 
D) variance committee. 
A) estimates committee. 
B) board of directors. 
C) budget committee. 
D) variance committee.

Question 20

What is the typical overall time period for which a budget is set?

Accepted Answer

A) two years. 
B) three months. 
C) twelve months. 
D) five years. 
A) two years. 
B) three months. 
C) twelve months. 
D) five years.

The adverse (unfavourable)variance is:

Budget targets should be:

Which statement about the uses of budgets is not true?

Which budget criticism can be dealt with by adapting and improving budgeting practices?

How is a budget best defined?

The master budget would typically consist of a budgeted:

How many of the following items would be included in a cash budget? ? Dividends paid to shareholders. ? Doubtful debts. ? Purchase of fixed asset for cash. ? Bonus share issue.

Which outlay does not appear in the cash budget?

There is often a limiting factor that stops a business from achieving its objectives to the maximum extent. In most instances the limiting factor is:

An adverse (unfavourable)labour efficiency variance could be caused by:

In which order do the following steps in the budget setting process actually occur? i)Co-ordinate the budget. Ii)Identify the limiting factor. Iii)Monitor performance relative to budget.

What is the group which oversees the budgeting process within an organisation?

What is the typical overall time period for which a budget is set?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 11: Budgeting

The adverse (unfavourable)variance is:

Budget targets should be:

Which statement about the uses of budgets is not true?

Which budget criticism can be dealt with by adapting and improving budgeting practices?

How is a budget best defined?

The master budget would typically consist of a budgeted:

How many of the following items would be included in a cash budget? ? Dividends paid to shareholders. ? Doubtful debts. ? Purchase of fixed asset for cash. ? Bonus share issue.

Which outlay does not appear in the cash budget?

There is often a limiting factor that stops a business from achieving its objectives to the maximum extent. In most instances the limiting factor is:

An adverse (unfavourable)labour efficiency variance could be caused by:

In which order do the following steps in the budget setting process actually occur? i)Co-ordinate the budget. Ii)Identify the limiting factor. Iii)Monitor performance relative to budget.

What is the group which oversees the budgeting process within an organisation?

What is the typical overall time period for which a budget is set?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters