Question 1

The task of preparing a budget should be the sole task of the most important department in an organization.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.

Accepted Answer

A) True 
 B)False

Question 4

Northern Company is preparing a cash budget for June.The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June.Northern Company has an agreement with its bank to maintain a cash balance of at least $10,000.As of May 31, the company owes $15,000 to the bank.To maintain the $10,000 required balance, during June the company must:

Accepted Answer

A) Borrow $4,500 
B) Borrow $2,500 
C) Borrow $10,000 
D) Repay $7,500 
E) Repay $2,500 
A) Borrow $4,500 
B) Borrow $2,500 
C) Borrow $10,000 
D) Repay $7,500 
E) Repay $2,500

Question 5

Operating budgets include all the following budgets except the:

Accepted Answer

A) Sales budget. 
B) Selling expense budget. 
C) Cash budget. 
D) Merchandise purchases budget. 
E) General and administrative expense budget. 
A) Sales budget. 
B) Selling expense budget. 
C) Cash budget. 
D) Merchandise purchases budget. 
E) General and administrative expense budget.

Question 6

Stritch Company is trying to decide how many units of merchandise to order each month.The company's policy is to have 20% of the next month's sales in inventory at the end of each month.Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively.How many units must be purchased in September?

Accepted Answer

A) 14,000 
B) 20,000 
C) 22,000 
D) 24,000 
E) 28,000 
A) 14,000 
B) 20,000 
C) 22,000 
D) 24,000 
E) 28,000

Question 7

The master budget includes:

Accepted Answer

A) Only operating budgets and financial budgets. 
B) Only a capital expenditures budget and a cash budget. 
C) Only a budgeted income statement and a budgeted balance sheet. 
D) Only a cash budget and operating budgets. 
E) Operating budgets, a capital expenditure budget, and financial budgets. 
A) Only operating budgets and financial budgets. 
B) Only a capital expenditures budget and a cash budget. 
C) Only a budgeted income statement and a budgeted balance sheet. 
D) Only a cash budget and operating budgets. 
E) Operating budgets, a capital expenditure budget, and financial budgets.

Question 8

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

Accepted Answer

A) Sales budget. 
B) Merchandise purchases budget. 
C) Production budget. 
D) Rolling budget. 
E) Manufacturing budget. 
A) Sales budget. 
B) Merchandise purchases budget. 
C) Production budget. 
D) Rolling budget. 
E) Manufacturing budget.

Question 9

A department store has budgeted sales of 12,000 men's suits in September.Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season.Beginning inventory for September is expected to be 4,000 suits.What is the dollar amount of purchase of suits? Each suit has a cost of $75.

Accepted Answer

A) $750,000 
B) $900,000 
C) $1,050,000 
D) $1,200,000 
E) $1,350,000 
A) $750,000 
B) $900,000 
C) $1,050,000 
D) $1,200,000 
E) $1,350,000

Question 10

One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes.

Accepted Answer

A) True 
 B)False

Question 11

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

Accepted Answer

A) True 
 B)False

Question 12

Budgeting is an informal plan for future business activities.

Accepted Answer

A) True 
 B)False

Question 13

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 expense 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 14

Slim Corp.requires a minimum $8,000 cash balance.If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly).Loans are repaid at month's end from any excess cash.The cash balance on July 1 is $8,400.Cash receipts other than for loans received for July, August, and September are forecasted as $24,000, $32,000, and $40,000, respectively.Payments other than for loan or interest payments for the same period are planned at $28,000, $30,000, and $32,000, respectively.At July 1, there are no outstanding loans.
Required:
Prepare a cash budget for July, August, and September.

Accepted Answer

* $3,600 x

Question 15

Larger, more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.

Accepted Answer

A) True 
 B)False

Question 16

Describe at least five benefits of budgeting.

Accepted Answer

Benefits of budgeting are:
(1.)Budgeting

Question 17

Cambridge, Inc.is preparing its master budget for the quarter ended June 30.It sells a single product for $40 each.Sales are 60% cash and 40% on credit.All credit sales are collected in the month following the sale.At March 31, the balance in Accounts Receivable is $12,000, which represents the uncollected balance on March sales.Budgeted sales for the next four months follow:
 $ \begin{array}{lllll}
& \underline { \text { April } }& \underline{ \text { May } } & \underline{ \text { Jurse } } & \underline{ \text { July } }\
\text { Sales in units }&800 & 1,000 & 600 & 1,200
\end{array} $
 The product cost is $20 per unit, and desired ending inventory is 60% of the following month's sales in units.Inventory at March 31 is 480 units.Purchases are paid 50% in the month of purchase and 50% in the following month.At March 31, the balance in accounts payable is $11,000, which represents the unpaid purchases from March.Operating expenses are paid in the month incurred and consist of:
Commissions (10% of sales)
Shipping (3% of sales)
Office salaries ($3,000 per month)
Rent ($5,000 per month)
Depreciation is $2,000 per month.
Income taxes are 40% and will be paid on July 1.There are no taxes payable at March 31.A minimum cash balance of $12,000 is required, and the beginning cash balance is $12,000.Loans are obtained at the end of any month when a cash shortage occurs.Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end.If an excess balance of cash exists, loans are repaid at the end of the month.At March 31, the loan balance is $2,000.
Prepare the following master budget schedules (round all dollar amounts to the nearest whole dollar)for each of the months of April, May, and June that includes the:
(a)Sales budget
(b)Schedule of cash receipts
(c)Merchandise purchases budget
(d)Schedule of cash disbursements for purchases of merchandise
(e)Schedule of cash disbursements for selling and administrative expenses
(f)Cash budget, including information on the loan balance
(g)Budgeted income statement

Accepted Answer

(a)- (d) @#IMG-DLM&_TB6311_00_TB6311_00_TB6311_00

Question 18

Budget preparation is best determined in a top-down managerial approach.

Accepted Answer

A) True 
 B)False

Question 19

When preparing the cash budget, all the following should be considered except:

Accepted Answer

A) Cash receipts from customers. 
B) Cash payments for merchandise. 
C) Depreciation expense. 
D) Cash payments for income taxes. 
E) Cash payments for capital expenditures. 
A) Cash receipts from customers. 
B) Cash payments for merchandise. 
C) Depreciation expense. 
D) Cash payments for income taxes. 
E) Cash payments for capital expenditures.

Question 20

What is a manufacturing budget?

Accepted Answer

A manufacturing budget shows t

The task of preparing a budget should be the sole task of the most important department in an organization.

Preparing a master budget is usually the responsibility of:

Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.

Operating budgets include all the following budgets except the:

The master budget includes:

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes.

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

Budgeting is an informal plan for future business activities.

Larger, more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.

Describe at least five benefits of budgeting.

Budget preparation is best determined in a top-down managerial approach.

When preparing the cash budget, all the following should be considered except:

What is a manufacturing budget?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters

Exam 7: Master Budgets and Performance Planning

The task of preparing a budget should be the sole task of the most important department in an organization.

Preparing a master budget is usually the responsibility of:

Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.

Operating budgets include all the following budgets except the:

The master budget includes:

A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the:

One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes.

Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and revising those budgets as each period is completed.

Budgeting is an informal plan for future business activities.

Larger, more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.

Describe at least five benefits of budgeting.

Budget preparation is best determined in a top-down managerial approach.

When preparing the cash budget, all the following should be considered except:

What is a manufacturing budget?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters