Question 1

Which of the following is a benefit of participative budgeting?

Accepted Answer

A)  Employees tend to be more motivated to achieve the budget. 
B)  A twelve-month planning horizon is maintained at all times. 
C)  Budget planning is highly centralized. 
D)  Communication is clearer because it flows in only one direction - upward. 
A)  Employees tend to be more motivated to achieve the budget. 
B)  A twelve-month planning horizon is maintained at all times. 
C)  Budget planning is highly centralized. 
D)  Communication is clearer because it flows in only one direction - upward.

Question 2

How do short-term plans differ from long-term plans?

Accepted Answer

Answers will vary
Short-term p

Question 3

Which of the following is a benefit associated with budgeting?

Accepted Answer

A)  Promotes planning and coordination 
B)  The ability to take corrective action to improve performance 
C)  Enhances performance measurement 
D)  All of the answers are correct 
A)  Promotes planning and coordination 
B)  The ability to take corrective action to improve performance 
C)  Enhances performance measurement 
D)  All of the answers are correct

Question 4

Compton Company expects the following total sales: The company expects 60% of its sales to be credit sales and 40% for cash. Credit sales are collected as follows: 30% in the month of sale, 70% in the month following the sale. The budgeted accounts receivable balance on May 31 is: $\begin{array}{|l|c|}
\hline {\text { Month }} & \text { Sales } \
\hline \text { March } & \$ 30,000 \
\hline \text { April } & \$ 20,000 \
\hline \text { May } & \$ 30,000 \
\hline \text { June } & \$ 25,000 \
\hline
\end{array}$

Accepted Answer

A)  $12,240. 
B)  $12,600. 
C)  $20,400. 
D)  $21,000. 
A)  $12,240. 
B)  $12,600. 
C)  $20,400. 
D)  $21,000.

Question 5

Select the incorrect statement regarding the cash budget.

Accepted Answer

A)  The cash budget helps managers to anticipate cash shortages and excess cash balances. 
B)  Cash inflows and outflows indicated on the cash budget are reported on a company's pro forma statement of cash flows. 
C)  Cash payments may include outflows for inventory, selling and administrative expenses, and equipment purchases. 
D)  The total cash available is calculated by adding cash receipts and the ending cash balance. 
A)  The cash budget helps managers to anticipate cash shortages and excess cash balances. 
B)  Cash inflows and outflows indicated on the cash budget are reported on a company's pro forma statement of cash flows. 
C)  Cash payments may include outflows for inventory, selling and administrative expenses, and equipment purchases. 
D)  The total cash available is calculated by adding cash receipts and the ending cash balance.

Question 6

Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:

Accepted Answer

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

Question 7

What information does the sales budget provide for pro forma financial statements?

Accepted Answer

A)  Total budgeted sales to be used on the pro forma income statement 
B)  Cash collections from customers to be used on the pro forma balance sheet 
C)  The ending balance in accounts payable which appears on the pro forma balance sheet 
D)  All of the answers are correct. 
A)  Total budgeted sales to be used on the pro forma income statement 
B)  Cash collections from customers to be used on the pro forma balance sheet 
C)  The ending balance in accounts payable which appears on the pro forma balance sheet 
D)  All of the answers are correct.

Question 8

Budgeted sales commissions would appear on the:

Accepted Answer

A)  selling, general and administrative budget and pro forma income statement 
B)  selling, general and administrative budget and pro forma balance sheet 
C)  sales budget and pro forma balance sheet 
D)  sales budget and pro forma income statement 
A)  selling, general and administrative budget and pro forma income statement 
B)  selling, general and administrative budget and pro forma balance sheet 
C)  sales budget and pro forma balance sheet 
D)  sales budget and pro forma income statement

Question 9

Markham Company has completed its sales budget for the first quarter of Year 2. Projected credit sales for the first four months of the year are shown below: The company's past records show collection of credit sales as follows: 40% in the month of sale and the balance in the following month. The total cash collection from receivables in March is expected to be: $$\begin{array} { | l | l | } 
\hline \text { January } & \$ 30,000 \
\hline \text { February } & \$ 36,000 \
\hline \text { March } & \$ 45,000 \
\hline \text { April } & \$ 48,000 \
\hline
\end{array}$$

Accepted Answer

A)  $18,000. 
B)  $45,000. 
C)  $41,400. 
D)  $39,600. 
A)  $18,000. 
B)  $45,000. 
C)  $41,400. 
D)  $39,600.

Question 10

Which of the following would be prepared first when a merchandising company uses a master budget?

Accepted Answer

A)  Selling and administrative expense budget 
B)  Budgeted income statement 
C)  Sales forecast 
D)  Inventory purchases budget 
A)  Selling and administrative expense budget 
B)  Budgeted income statement 
C)  Sales forecast 
D)  Inventory purchases budget

Question 11

Depreciation expense will appear on the schedule of cash payments for selling and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 12

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000.What were the total payments on account?

Accepted Answer

A)  $450,000 
B)  $395,000 
C)  $535,000 
D)  $465,000 
A)  $450,000 
B)  $395,000 
C)  $535,000 
D)  $465,000

Question 13

Benton Company's sales budget shows the following expected total sales: The company expects 80% of its sales to be on account (credit sales). Credit sales are collected as follows: 25% in the month of sale, 72% in the month following the sale with the remainder being uncollectible and written off. The total cash receipts during April would be: $$\begin{array} { | l | c | } 
\hline  { \text { Month } } & \text { Sales } \
\hline \text { January } & \$ 25,000 \
\hline \text { February } & \$ 30,000 \
\hline \text { March } & \$ 35,000 \
\hline \text { April } & \$ 40,000 \
\hline
\end{array}$$

Accepted Answer

A)  $16,000. 
B)  $28,160. 
C)  $24,640. 
D)  $36,160. 
A)  $16,000. 
B)  $28,160. 
C)  $24,640. 
D)  $36,160.

Question 14

Which of the following is not an advantage of budgeting?

Accepted Answer

A)  Provides assurance that accounting records are in accordance with generally accepted accounting principles 
B)  Forces coordination among departments to promote decisions in the best interests of the company as a whole 
C)  Provides advance notice of potential shortages, bottlenecks, or other weaknesses in operating plans 
D)  Provides a way to evaluate performance 
A)  Provides assurance that accounting records are in accordance with generally accepted accounting principles 
B)  Forces coordination among departments to promote decisions in the best interests of the company as a whole 
C)  Provides advance notice of potential shortages, bottlenecks, or other weaknesses in operating plans 
D)  Provides a way to evaluate performance

Question 15

What is the amount of ending inventory that the company will report on its pro forma balance sheet?

Accepted Answer

A)  $7,500 
B)  $10,500 
C)  $35,300 
D)  $60,500 
A)  $7,500 
B)  $10,500 
C)  $35,300 
D)  $60,500

Question 16

The nature of planning changes with the length of the time period being considered. Generally, the shorter the time period, the more general the plans.

Accepted Answer

A) True 
 B)False

Question 17

What budget is generally not included in a master budget?

Accepted Answer

A)  Strategic budget 
B)  Capital budget 
C)  Operating budget 
D)  All of the answers are correct. 
A)  Strategic budget 
B)  Capital budget 
C)  Operating budget 
D)  All of the answers are correct.

Question 18

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 19

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 20

What is the role of top management in a participative budgeting system?

Accepted Answer

A)  Top management has no role - the budget is entirely developed by the lower-level employees. 
B)  Top management must always tighten employee-set budget standards to eliminate employees' attempts to build slack into the standards. 
C)  Top management must ensure that employee-generated objectives are consistent with those of the company. 
D)  All of the answers are correct. 
A)  Top management has no role - the budget is entirely developed by the lower-level employees. 
B)  Top management must always tighten employee-set budget standards to eliminate employees' attempts to build slack into the standards. 
C)  Top management must ensure that employee-generated objectives are consistent with those of the company. 
D)  All of the answers are correct.

Which of the following is a benefit of participative budgeting?

How do short-term plans differ from long-term plans?

Which of the following is a benefit associated with budgeting?

Select the incorrect statement regarding the cash budget.

Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:

What information does the sales budget provide for pro forma financial statements?

Budgeted sales commissions would appear on the:

Which of the following would be prepared first when a merchandising company uses a master budget?

Depreciation expense will appear on the schedule of cash payments for selling and administrative expenses.

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000.What were the total payments on account?

Which of the following is not an advantage of budgeting?

What is the amount of ending inventory that the company will report on its pro forma balance sheet?

The nature of planning changes with the length of the time period being considered. Generally, the shorter the time period, the more general the plans.

What budget is generally not included in a master budget?

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?

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

What is the role of top management in a participative budgeting system?

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 benefit of participative budgeting?

How do short-term plans differ from long-term plans?

Which of the following is a benefit associated with budgeting?

Select the incorrect statement regarding the cash budget.

Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:

What information does the sales budget provide for pro forma financial statements?

Budgeted sales commissions would appear on the:

Which of the following would be prepared first when a merchandising company uses a master budget?

Depreciation expense will appear on the schedule of cash payments for selling and administrative expenses.

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000.What were the total payments on account?

Which of the following is not an advantage of budgeting?

What is the amount of ending inventory that the company will report on its pro forma balance sheet?

The nature of planning changes with the length of the time period being considered. Generally, the shorter the time period, the more general the plans.

What budget is generally not included in a master budget?

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?

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

What is the role of top management in a participative budgeting system?

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