Question 1

Which of the following accounts would appear on a budgeted balance sheet?

Accepted Answer

A)  Income tax expense. 
B)  Accounts receivable. 
C)  Sales commissions. 
D)  Depreciation expense. 
E)  All of these. 
A)  Income tax expense. 
B)  Accounts receivable. 
C)  Sales commissions. 
D)  Depreciation expense. 
E)  All of these.

Question 2

In preparing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from:

Accepted Answer

A)  The purchases budget. 
B)  The sales budget. 
C)  The capital expenditures budget. 
D)  The budgeted income statement. 
E)  The selling expenses budget. 
A)  The purchases budget. 
B)  The sales budget. 
C)  The capital expenditures budget. 
D)  The budgeted income statement. 
E)  The selling expenses budget.

Question 3

Part of the cash budget is based on information taken from the capital expenditures budget.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a result of following a well-designed budgeting process?

Accepted Answer

A)  Improved decision-making processes. 
B)  Improved performance evaluations. 
C)  Improved coordination of business activities. 
D)  Assurance of future profits. 
E)  All of these are benefits of effective budgeting. 
A)  Improved decision-making processes. 
B)  Improved performance evaluations. 
C)  Improved coordination of business activities. 
D)  Assurance of future profits. 
E)  All of these are benefits of effective budgeting.

Question 5

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

Accepted Answer

A)  Cash budget. 
B)  Capital expenditures budget. 
C)  Rolling budget. 
D)  Sales budget. 
E)  Production budget. 
A)  Cash budget. 
B)  Capital expenditures budget. 
C)  Rolling budget. 
D)  Sales budget. 
E)  Production budget.

Question 6

Kyoto, Inc. predicts the following sales in units for the coming four months: Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material

Accepted Answer

A)  1,418 lb. 
B)  1,460 lb. 
C)  1,502 lb. 
D)  264 lb. 
E)  283 lb. 
A)  1,418 lb. 
B)  1,460 lb. 
C)  1,502 lb. 
D)  264 lb. 
E)  283 lb.

Question 7

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

Accepted Answer

A)  Participatory budgeting. 
B)  Capital budgeting. 
C)  Balanced budgeting. 
D)  Continuous budgeting. 
E)  Primary budgeting. 
A)  Participatory budgeting. 
B)  Capital budgeting. 
C)  Balanced budgeting. 
D)  Continuous budgeting. 
E)  Primary budgeting.

Question 8

Guidance for preparing a master budget is usually the responsibility of:

Accepted Answer

A)  The company CEO. 
B)  The marketing department. 
C)  A budget committee. 
D)  The chief financial officer. 
E)  Lower level management. 
A)  The company CEO. 
B)  The marketing department. 
C)  A budget committee. 
D)  The chief financial officer. 
E)  Lower level management.

Question 9

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

Accepted Answer

A)  Sales budget. 
B)  Operating budget. 
C)  Capital expenditures budget. 
D)  Selling expense budget. 
E)  Purchases budget. 
A)  Sales budget. 
B)  Operating budget. 
C)  Capital expenditures budget. 
D)  Selling expense budget. 
E)  Purchases budget.

Question 10

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.

Accepted Answer

A) True 
 B)False

Question 11

Fairway's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:

Accepted Answer

A)  6,000 units. 
B)  7,000 units. 
C)  6,300 units. 
D)  7,300 units. 
E)  Some other amount. 
A)  6,000 units. 
B)  7,000 units. 
C)  6,300 units. 
D)  7,300 units. 
E)  Some other amount.

Question 12

The most useful budget figures are developed:

Accepted Answer

A)  From the "top-down". 
B)  From the "bottom-up" following a participatory process. 
C)  Solely by the budget committee. 
D)  By the CEO. 
E)  After the accounting period has begun. 
A)  From the "top-down". 
B)  From the "bottom-up" following a participatory process. 
C)  Solely by the budget committee. 
D)  By the CEO. 
E)  After the accounting period has begun.

Question 13

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

Accepted Answer

A) True 
 B)False

Question 14

A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a:

Accepted Answer

A)  Master budget. 
B)  Cash budget. 
C)  Capital expenditures budget. 
D)  Rolling budget. 
E)  Production budget. 
A)  Master budget. 
B)  Cash budget. 
C)  Capital expenditures budget. 
D)  Rolling budget. 
E)  Production budget.

Question 15

The ______________________________ shows the budgeted costs for direct materials, direct labor, and overhead, based on the budgeted production volume from the production budget.

Accepted Answer

Manufactur

Question 16

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.

Accepted Answer

A) True 
 B)False

Question 17

A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a:

Accepted Answer

A)  General and administrative expense budget. 
B)  Sales budget. 
C)  Cash payments budget. 
D)  Overhead budget. 
E)  Selling expense budget. 
A)  General and administrative expense budget. 
B)  Sales budget. 
C)  Cash payments budget. 
D)  Overhead budget. 
E)  Selling expense budget.

Question 18

Peru, Inc. is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter:
Prepare a budgeted income statement for this first quarter.

Accepted Answer

The answer of Peru, Inc. is preparing its master budget...

Question 19

Pantheon Company has prepared the following forecasts of monthly sales:
Pantheon has decided that the number of units in its inventory at the end of each month should equal 25% of the next month's sales. The budgeted cost per unit is $30.
(1) How many units should be in July's beginning inventory?
(2) What amount should be budgeted for the cost of merchandise purchases in July?
(3) How many units should be purchased in September?

Accepted Answer

(1) July's beginning

Question 20

What is a capital expenditures budget?

Accepted Answer

The capital expenditures budge

Exam 23: Master Budgets and Planning

Which of the following accounts would appear on a budgeted balance sheet?

In preparing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from:

Part of the cash budget is based on information taken from the capital expenditures budget.

Which of the following is not a result of following a well-designed budgeting process?

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:

Kyoto, Inc. predicts the following sales in units for the coming four months: Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

Guidance for preparing a master budget is usually the responsibility of:

A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.

Fairway's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:

The most useful budget figures are developed:

Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.

The ______________________________ shows the budgeted costs for direct materials, direct labor, and overhead, based on the budgeted production volume from the production budget.

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.

A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a:

Peru, Inc. is preparing its master budget for the first quarter of its calendar year. The following forecasted data relate to the first quarter: Prepare a budgeted income statement for this first quarter.

What is a capital expenditures budget?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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