Exam 14: Planning for Profit and Cost Control

The first budget prepared in a master budget is the cash receipts budget.

The inventory purchases budget is based on which budget?

Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business?

Which of the following would not be included in the inventory purchases budget?

Which of the following would appear on a selling and administrative expense budget, but would not appear on a schedule of cash payments for selling and administrative expenses?

Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?

Select the incorrect statement regarding the cash budget.

Which of the following is a benefit of participative budgeting?

Select the correct statement regarding the selling and administrative (S&A) expense budget.

Which of the following items will not appear on a cash budget?

Cheyenne Company has budgeted the following information for June: Cash receipts \ 271,000 Beginning cash balance 5,000 Cash payments 280,000 Desired ending cash balance 25,000 If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1^st. The amount of interest paid on July 1 would be:

The marketing department is primarily responsible for establishing the sales forecast.

The cash budget is based on which budget?

Which of the following budgets needs to be prepared prior to preparing a purchases budget?

Indicate whether each of the following statements is true or false. 1. A master budget provides information about plans and expectations for the next five years. 2. A company that uses a participative budget engages in budgeting throughout the year. 3. One of the benefits of budgeting is that it promotes coordination and communication. 4. A budget formalizes managerial plans. 5. At the end of a period, a company should not compare actual results to the budget because budgets are notoriously inaccurate.

Indicate whether each of the following statements is true or false. 1. The Selling and Administrative Expense (S&A) budget includes depreciation expense, which is based on projections from the capital expenditures budget. 2. Interest expense on the S&A budget is based on borrowing projections shown in the cash budget. 3. The schedule of cash payments for selling and administrative expenses includes the amount of depreciation expense for the period. 4. A pro forma financial statement could be described as a budgeted financial statement. 5. Pro forma financial statements include amounts drawn from the sales budget, the inventory purchases budget, the S&A budget, and the cash budget.

Pro forma financial statements are financial statements that are prepared based on budgeted future amounts.

The budget director of Mandy's Kitchen Shop has prepared the following sales budget. The company had $50,000 of accounts receivable at January 1. The company normally collects 100 percent of its accounts receivable in the month following the sale. Required: (a) Complete the schedule of cash receipts by filling in the missing amounts. What are the total budgeted cash receipts for the first quarter. (b) Determine the amount of accounts receivable that Mandy's should report on the first quarter pro forma balance sheet.

Which of the following statements is true?

Indicate whether each of the following statements is true or false. 1. Employees often find that budgets are constraining and limiting. 2. Budgets establish standards by which performance is evaluated. 3. The attitudes and actions of upper-level management have little impact on the effectiveness of a company's budget. 4. Participative budgeting means that a company's budget should be prepared with the input of lower-level employees. 5. In preparing a budget, information flows occur only from the bottom up.