Question 1

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 2

Define sensitivity analysis.Why do managers conduct sensitivity analysis during the budget process?

Accepted Answer

Sensitivity analysis is a what-if techni

Question 3

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 4

The production manager projects direct labor costs.

Accepted Answer

A) True 
 B)False

Question 5

Eleanor's Mittens,Inc. ,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

Accepted Answer

A) capital expenditures budget 
B) budgeted funds flow statement 
C) cash budget 
D) sales budget 
A) capital expenditures budget 
B) budgeted funds flow statement 
C) cash budget 
D) sales budget

Question 6

The production budget determines the number of units to be produced during the period.

Accepted Answer

A) True 
 B)False

Question 7

The capital expenditures budget represents the company's plan for purchasing the long-term assets.

Accepted Answer

A) True 
 B)False

Question 8

McLeod Fries,Inc.has budgeted sales for June and July at $670,000 and $770,000,respectively.Sales are 85% credit,of which 60% is collected in the month of sale and 40% is collected in the following month.What is the budgeted Accounts Receivable balance on July 31?

Accepted Answer

A) $308,000 
B) $261,800 
C) $227,800 
D) $654,500 
A) $308,000 
B) $261,800 
C) $227,800 
D) $654,500

Question 9

The cost accountant works directly with the corporate president to develop the selling and administrative expense budget.

Accepted Answer

A) True 
 B)False

Question 10

What is the final step in the master budget process?

Accepted Answer

Preparation of the b

Question 11

Magnolia,Inc.has budgeted sales for the first quarter of the next year to be 40,000 units.The inventory on hand at the beginning of quarter is 10,000 units.The desired ending inventory is 4,000 units.Calculate the budgeted production for the first quarter.

Accepted Answer

A) 4,000 units 
B) 34,000 units 
C) 30,000 units 
D) 44,000 units 
A) 4,000 units 
B) 34,000 units 
C) 30,000 units 
D) 44,000 units

Question 12

The last step in the preparation of the master budget is the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Burns Corp.has provided a part of its budget for the second quarter:
 
The cash balance on April 1 is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the projected cash balance at the end of June.

Accepted Answer

A) $79,500 
B) $25,500 
C) $60,500 
D) $34,500 
A) $79,500 
B) $25,500 
C) $60,500 
D) $34,500

Question 14

Which of the following would not appear on a multiple-step budgeted income statement?

Accepted Answer

A)   
B) income tax expense 
C)   
D) salaries payable 
A)   
B) income tax expense 
C)   
D) salaries payable

Question 15

Budgeting software is often designed as a component of the company's Enterprise Resource Planning (ERP)system.

Accepted Answer

A) True 
 B)False

Question 16

The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,ending Merchandise Inventory for the budgeted balance sheet,and merchandise inventory purchases for the cash budget.

Accepted Answer

A) True 
 B)False

Question 17

To calculate budgeted direct labor costs,multiply the number of units to be produced by the number of projected direct labor hours.Next,multiply that total by the actual direct labor cost per hour.

Accepted Answer

A) True 
 B)False

Question 18

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.While doing so,the Cash balance can be taken from the ________.

Accepted Answer

A) operational budget 
B) budgeted income statement 
C) cash budget 
D) sales budget 
A) operational budget 
B) budgeted income statement 
C) cash budget 
D) sales budget

Question 19

Which of the following best describes the term "sensitivity analysis"?

Accepted Answer

A) It is a testing technique to determine how results would differ if key assumptions are changed. 
B) It is an analysis of the emotional sensitivity of a company's employees. 
C) It is an evaluation of the accuracy of the assumptions. 
D) It evaluates a company's financial condition by doing financial statement analysis. 
A) It is a testing technique to determine how results would differ if key assumptions are changed. 
B) It is an analysis of the emotional sensitivity of a company's employees. 
C) It is an evaluation of the accuracy of the assumptions. 
D) It evaluates a company's financial condition by doing financial statement analysis.

Question 20

After comparing budgets with the actual results,the feedback allows managers to determine what,if any,corrective action should be taken.

Accepted Answer

A) True 
 B)False

Exam 22: Master Budgets

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

Define sensitivity analysis.Why do managers conduct sensitivity analysis during the budget process?

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

The production manager projects direct labor costs.

Eleanor's Mittens,Inc. ,a merchandising company,wants to prepare the budgeted balance sheet for the next budget period.For this purpose,the amount of ending cash balance can be retrieved from the ________.

The production budget determines the number of units to be produced during the period.

The capital expenditures budget represents the company's plan for purchasing the long-term assets.

McLeod Fries,Inc.has budgeted sales for June and July at $670,000 and $770,000,respectively.Sales are 85% credit,of which 60% is collected in the month of sale and 40% is collected in the following month.What is the budgeted Accounts Receivable balance on July 31?

The cost accountant works directly with the corporate president to develop the selling and administrative expense budget.

What is the final step in the master budget process?

Magnolia,Inc.has budgeted sales for the first quarter of the next year to be 40,000 units.The inventory on hand at the beginning of quarter is 10,000 units.The desired ending inventory is 4,000 units.Calculate the budgeted production for the first quarter.

The last step in the preparation of the master budget is the budgeted balance sheet.

Burns Corp.has provided a part of its budget for the second quarter: The cash balance on April 1 is $14,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the projected cash balance at the end of June.

Which of the following would not appear on a multiple-step budgeted income statement?

Budgeting software is often designed as a component of the company's Enterprise Resource Planning (ERP)system.

The inventory,purchases,and cost of goods sold budget determines cost of goods sold for the budgeted income statement,ending Merchandise Inventory for the budgeted balance sheet,and merchandise inventory purchases for the cash budget.

To calculate budgeted direct labor costs,multiply the number of units to be produced by the number of projected direct labor hours.Next,multiply that total by the actual direct labor cost per hour.

A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.While doing so,the Cash balance can be taken from the ________.

Which of the following best describes the term "sensitivity analysis"?

After comparing budgets with the actual results,the feedback allows managers to determine what,if any,corrective action should be taken.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

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

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