Question 1

The cash budget and the budgeted financial statements are collectively known as the ________.

Accepted Answer

A)  operating budget 
B)  master budget 
C)  financial budget 
D)  production budget 
A)  operating budget 
B)  master budget 
C)  financial budget 
D)  production budget

Question 2

From the following details provided by NutShell,Inc.,prepare the manufacturing overhead budget for the year.Also,calculate the predetermined overhead allocation rate,using direct labor hours as the allocation base.
 $\begin{array}{|l|r|r|r|r|}
\hline&\text { First } &\text { Second } & \text { Third } & \text { Fourth } \
&\text { Quarter }&\text { Quarter } & \text { Quarter }& \text { Quarter }\
\hline \text { Budgeted production units } & 15,000 & 18,00 & 21,000 & 24,000 \
\hline \text { Variable overhead cost per urit } & \$ 45 & \$ 45 & \$ 45 & \$ 45 \
\hline \text { Fixed overhead costs: } & & & & \
\hline \text { Depreciation } & \$ 3,000 & \$ 3,000 & \$ 3,000 & \$ 3,000 \
\hline \text { Rent } & \$ 5,000 & \$ 5,750 & \$ 6,250 & \$ 7,250 \
\hline \text { Direct Labor Hours } & 12,500 & 14,500 & 17,200 & 12,800 \
\hline
\end{array}$

Accepted Answer

@#IMG-DLM& *VOH - Variable Man

Question 3

A budget is a financial plan that managers use to coordinate a business's activities.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is useful to combine the data of different segments using different software for the purpose of creating companywide budgets?

Accepted Answer

A)  accounting development manual 
B)  budgeting software 
C)  financial analysis software 
D)  budget creation manual 
A)  accounting development manual 
B)  budgeting software 
C)  financial analysis software 
D)  budget creation manual

Question 5

The production budget is the first component of the operating budget.

Accepted Answer

A) True 
 B)False

Question 6

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Payable can be taken from the ________.

Accepted Answer

A)  inventory, purchases, and cost of goods sold budget 
B)  schedule of cash payments 
C)  direct materials budget 
D)  selling and administrative expenses budget 
A)  inventory, purchases, and cost of goods sold budget 
B)  schedule of cash payments 
C)  direct materials budget 
D)  selling and administrative expenses budget

Question 7

Which of the following statements regarding the capital expenditures budget is correct?

Accepted Answer

A)  Installment payments related to the purchase of long-term assets are included in the capital expenditures budget. 
B)  Capital expenditures are purchases of long-term assets, such as office supplies. 
C)  The decision to purchase long-term assets is part of a strategic plan. 
D)  Capital expenditures are inexpensive assets. 
A)  Installment payments related to the purchase of long-term assets are included in the capital expenditures budget. 
B)  Capital expenditures are purchases of long-term assets, such as office supplies. 
C)  The decision to purchase long-term assets is part of a strategic plan. 
D)  Capital expenditures are inexpensive assets.

Question 8

What is the final step in the master budget process?

Accepted Answer

Preparation of the b

Question 9

All of the information that is needed to prepare the budgeted statement of cash flows comes from the budgeted income statement.

Accepted Answer

A) True 
 B)False

Question 10

Pavone Corp.has prepared a preliminary cash budget for the third quarter as shown below: $$\begin{array} { | l | r | r | r | } 
\hline \text { Cash Budget } & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Beginning cash balance } & \$ 34,000 & \$ 15,000 & \$ 18,500 \
\hline \text { Plus: Cash collections } & \$ 56,000 & \$ 52,000 & \underline { 47,000 } \
\hline \text { Cash available } & 90,000 & \$ 67,000 & \$ 65,500 \
\hline \text { Less: Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 35,000 & 9,000 & 11,000 \
\hline \text { Operating expenses } & 40,000 & 30,500 & 30,800 \
\hline \text { Capital expenditures } & \underline { 0 } & \underline { 9,000 } & \underline { 7,400 } \
\hline \text { Ending cash balance } & \$ 15,000 & \$ 18,500 & \$ 16,300 \
\hline
\end{array}$$ Subsequently,the marketing department revised its figures for cash collections.New data are as follows: $53,000 in July,$56,000 in August,and $43,000 in September.Based on the new data,calculate the new projected cash balance at the end of September.

Accepted Answer

A)  $19,500 
B)  $16,300 
C)  $12,000 
D)  $13,300 
A)  $19,500 
B)  $16,300 
C)  $12,000 
D)  $13,300

Question 11

From the following details provided by Barry,Inc.,prepare the cost of goods sold budget for the year.
 $$\begin{array} { l l } 
\text { Direct materials per unit } & \$ 65 \
\text { Direct labor hours per unit } & 2 \text { hours } \
\text { Direct labor rate per hour } & \$ 50 \
\text { Manufacturing overhead cost per direct labor hour } & \$ 20 \
\text { Feginning inventory units } & 1,000 \
\text { Sales price per unit } & \$ 250
\end{array}$$ $$\begin{array} { l l l l } 
\text { First } & \text { Second } & \text { Third } & \text { Fourth } \
\text { Quarter } & \text { Ouarter } & \text { Quarter } & \text { Ouarter }
\end{array}$$ $\begin{array}{lllll}
\text { Units expected to be sold: } & 15,000 & 18,000 & 21,000 & 24,000
\end{array}$ Barry,Inc.expects no inventory units at the end of the second,third and fourth quarters.

Accepted Answer

Barry, Inc. 
Cost of Goods Sold Budget

Question 12

The cost accountant works with the office and sales managers to develop the selling and administrative expense budget.

Accepted Answer

A) True 
 B)False

Question 13

Farmerlands,Inc.has budgeted sales for the months of September and October at $304,000 and $272,000,respectively.Monthly sales are 80% credit and 20% cash.Of the credit sales,50% are collected in the month of sale,and 50% are collected in the following month.Calculate cash collections for the month of October.

Accepted Answer

A)  $163,200 
B)  $291,200 
C)  $284,800 
D)  $182,400 
A)  $163,200 
B)  $291,200 
C)  $284,800 
D)  $182,400

Question 14

McIntyre,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \
\hline \text { Cash collections } & \$ 51,000 & \$ 39,600 & \$ 47,700 \
\hline \text { Cash payments: } & & & \
\hline \text { Purchases of direct materials } & 30,000 & 21,700 & 17,300 \
\hline \text { Operating expenses } & 12,300 & 8,800 & 11,400 \
\hline \text { Capital expenditures } & 13,800 & 24,100 & 0 \
\hline
\end{array}$$ The cash balance on June 30 is projected to be $4,300.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.

Accepted Answer

A)  $9,167 
B)  $(5,833) 
C)  $48,800 
D)  $15,000 
A)  $9,167 
B)  $(5,833) 
C)  $48,800 
D)  $15,000

Question 15

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Finished Goods Inventory can be taken from the ________.

Accepted Answer

A)  production budget and cost of goods sold budget 
B)  financial budget 
C)  cash budget 
D)  selling and administrative expenses budget 
A)  production budget and cost of goods sold budget 
B)  financial budget 
C)  cash budget 
D)  selling and administrative expenses budget

Question 16

An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as ________.

Accepted Answer

A)  benchmarking 
B)  appropriation 
C)  budgetary slack 
D)  variance analysis 
A)  benchmarking 
B)  appropriation 
C)  budgetary slack 
D)  variance analysis

Question 17

Which of the following statements is true of the budgeting process?

Accepted Answer

A)  If a company carefully plans for its future, there will be no need to make modifications during the budget period. 
B)  It is a continuous process that encourages communication. 
C)  It shows the actual performance of the business. 
D)  Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated. 
A)  If a company carefully plans for its future, there will be no need to make modifications during the budget period. 
B)  It is a continuous process that encourages communication. 
C)  It shows the actual performance of the business. 
D)  Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated.

Question 18

List the three sections of the cash budget.

Accepted Answer

1.Cash receipts
2.Ca

Question 19

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Receivable can be obtained from the ________.

Accepted Answer

A)  schedule of inventory, purchases, and cost of goods sold budget 
B)  cash receipts from customers 
C)  capital expenditures budget 
D)  selling and administrative expenses budget 
A)  schedule of inventory, purchases, and cost of goods sold budget 
B)  cash receipts from customers 
C)  capital expenditures budget 
D)  selling and administrative expenses budget

Question 20

Which of the following describes the cash budget?

Accepted Answer

A)  It aids in planning to ensure the company has adequate inventory and cash on hand. 
B)  It captures the variable and fixed expenses of the business. 
C)  It depicts the breakdown of sales based on terms of collection. 
D)  It helps in planning to ensure the business has adequate cash. 
A)  It aids in planning to ensure the company has adequate inventory and cash on hand. 
B)  It captures the variable and fixed expenses of the business. 
C)  It depicts the breakdown of sales based on terms of collection. 
D)  It helps in planning to ensure the business has adequate cash.

The cash budget and the budgeted financial statements are collectively known as the ________.

A budget is a financial plan that managers use to coordinate a business's activities.

Which of the following is useful to combine the data of different segments using different software for the purpose of creating companywide budgets?

The production budget is the first component of the operating budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Payable can be taken from the ________.

Which of the following statements regarding the capital expenditures budget is correct?

What is the final step in the master budget process?

All of the information that is needed to prepare the budgeted statement of cash flows comes from the budgeted income statement.

The cost accountant works with the office and sales managers to develop the selling and administrative expense budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Finished Goods Inventory can be taken from the ________.

An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as ________.

Which of the following statements is true of the budgeting process?

List the three sections of the cash budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Receivable can be obtained from the ________.

Which of the following describes the cash budget?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 22: Master Budgets

The cash budget and the budgeted financial statements are collectively known as the ________.

A budget is a financial plan that managers use to coordinate a business's activities.

Which of the following is useful to combine the data of different segments using different software for the purpose of creating companywide budgets?

The production budget is the first component of the operating budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Payable can be taken from the ________.

Which of the following statements regarding the capital expenditures budget is correct?

What is the final step in the master budget process?

All of the information that is needed to prepare the budgeted statement of cash flows comes from the budgeted income statement.

The cost accountant works with the office and sales managers to develop the selling and administrative expense budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Finished Goods Inventory can be taken from the ________.

An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as ________.

Which of the following statements is true of the budgeting process?

List the three sections of the cash budget.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Accounts Receivable can be obtained from the ________.

Which of the following describes the cash budget?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters