Question 1

are components of a master budget.

Accepted Answer

A)  A cash budget and an activity budget 
B)  An operating budget and a financial budget 
C)  A continuous budget and a static budget 
D)  A strategic plan and an operating budget

Question 2

LeBron Company has the following information: $\begin{array}{ll}
\text { Month } & \text { Budgeted Purchas es } \
\text { January } & \$ 26,800 \
\text { February } & 29,000 \
\text { March } & 30,520 \
\text { April } & 29,480 \
\text { May } & 27,680
\end{array}$ Purchases are paid for in the following manner: 10% in the month of purchase 50% in the month after purchase 40% two months after purchase
Is the expected balance in Accounts Payable as of March 31.

Accepted Answer

A)  $18,312 
B)  $2,900 
C)  $39,068 
D)  $30,520

Question 3

Sapphire Company has the following data: $\begin{array}{lc}
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 108,000 \
\text { February } & 132000 \
\text { March } & 144,000 \
\text { April } & 120,000
\end{array}$ The gross profit rate is 40% and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. is the expected total purchases budgeted for February.

Accepted Answer

A)  $105,120 
B)  $81,360 
C)  $79,200 
D)  None of these answers is correct.

Question 4

A capital budget is a periodic business plan that includes a coordinated set of detailed operating schedules and financial statements.

Accepted Answer

A) True 
 B)False

Question 5

A budget is a qualitative expression of a plan of action.

Accepted Answer

A) True 
 B)False

Question 6

A sales budget is a prediction of sales under a given set of conditions.

Accepted Answer

A) True 
 B)False

Question 7

Line operating managers usually prepare and use the operating budget.

Accepted Answer

A) True 
 B)False

Question 8

Budgeted purchases = beginning inventory + cost of goods sold - desired ending inventory.

Accepted Answer

A) True 
 B)False

Question 9

The financial budgets of a nonmanufacturing company include the capital budget,the cash budget, and the budgeted balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

The sales budget is the responsibility of line management.

Accepted Answer

A) True 
 B)False

Question 11

What is the sequence of steps used in preparing the master budget?

Accepted Answer

A)  Output from financial budgets is used to prepare the operating budgets. 
B)  Output from operating budgets is used to prepare the financial budgets. 
C)  Operating and financial budgets are prepared independently at the end of the budgeting process. 
D)  Operating and financial budgets are prepared independently at the beginning of the budgeting process.

Question 12

Viking Company has the following data: $$\begin{array} { l l } 
\text { Month } & \text { Budgeted Sales } \
\text { January } & \$ 108,000 \
\text { February } & 132,000 \
\text { March } & 144,000 \
\text { April } & 120,000
\end{array}$$ The average mark- up on products is 40%, and the inventory at the end of December was $19,000. Desired inventory levels are 30% of next month's sales at cost. _ is the desired ending inventory for February.

Accepted Answer

A)  $25,920 
B)  $86,400 
C)  $43,200 
D)  $17,280

Question 13

detail the planned expenditures for facilities, equipment, new products, and other long- term investments.

Accepted Answer

A)  Pro forma statements 
B)  Strategic plans 
C)  Capital budgets 
D)  Continuous budgets

Question 14

An operating budget is the major part of a master budget that focuses on the income statement and its supporting schedules.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are operating budgets except:

Accepted Answer

A)  the budgeted income statement 
B)  the purchases budget 
C)  the capital budget 
D)  the cost of goods sold budget

Question 16

All of the following are operating budgets except:

Accepted Answer

A)  the cash budget 
B)  the operating expenses budget 
C)  the sales budget 
D)  the budgeted income statement

Question 17

Mickey Company has the following information: $$\begin{array} { l c } 
\text { Month } & \text { Budgeted Purchases } \
\text { January } & \$ 26,800 \
\text { February } & 29,000 \
\text { March } & 30,520 \
\text { April } & 29,480 \
\text { May } & 27,680
\end{array}$$ Purchases are paid for in the following manner: $10 \%$ in the month of purch ase
$50 \%$ in the month after purch as e
$\mathbf { 4 0 } \%$ two months after purch as e is the estimated cash disbursement in March from January purchases.

Accepted Answer

A)  $13,400 
B)  $10,720 
C)  $3,052 
D)  $12,208

Question 18

Felon Company expects a total of $20,000 sales in June. Of these, credit sales are expected to be $12,000. Collections are 50% in the month of sale, 40% in the month following the sale, and 5% two months following the sale. The remaining 5% is expected to be uncollectible. is the estimated cash collection in June from June sales.

Accepted Answer

A)  $14,000 
B)  $17,200 
C)  $20,000 
D)  $9,200

Question 19

Unit sales of Product X are currently 10,000, while unit sales of Product Y are double those of Product X. The company's sales forecast will be , assuming sales of Product X increase by 10% and those of Product Y go up by 4,000 units.

Accepted Answer

A)  11,000 and 24,000 units, respectively 
B)  10,000 and 20,000 units, respectively 
C)  11,000 and 22,000 units, respectively 
D)  None of these answers is correct.

Question 20

Accurate sales forecasting is essential to effective budgeting.

Accepted Answer

A) True 
 B)False

Exam 7: The Master Budget

are components of a master budget.

A capital budget is a periodic business plan that includes a coordinated set of detailed operating schedules and financial statements.

A budget is a qualitative expression of a plan of action.

A sales budget is a prediction of sales under a given set of conditions.

Line operating managers usually prepare and use the operating budget.

Budgeted purchases = beginning inventory + cost of goods sold - desired ending inventory.

The financial budgets of a nonmanufacturing company include the capital budget,the cash budget, and the budgeted balance sheet.

The sales budget is the responsibility of line management.

What is the sequence of steps used in preparing the master budget?

detail the planned expenditures for facilities, equipment, new products, and other long- term investments.

An operating budget is the major part of a master budget that focuses on the income statement and its supporting schedules.

All of the following are operating budgets except:

All of the following are operating budgets except:

Unit sales of Product X are currently 10,000, while unit sales of Product Y are double those of Product X. The company's sales forecast will be , assuming sales of Product X increase by 10% and those of Product Y go up by 4,000 units.

Accurate sales forecasting is essential to effective budgeting.