Question 1

Where does a company find forecasted financial statements for a five to ten year period?

Accepted Answer

A)  strategic plan 
B)  master budget 
C)  rolling budget 
D)  long-range plan 
A)  strategic plan 
B)  master budget 
C)  rolling budget 
D)  long-range plan D

Question 2

May Company has the following information:
$\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\
\text { January } & \$ 33,000 \
\text { February } & 37,000 \
\text { March } & 31,000 \
\text { April } & 30,000 \
\text { May } & 27,680
\end{array}$
Purchases are paid as follows:
75% in the month of purchase
25% one month after purchase
What is the expected balance in Accounts Payable on April 30?

Accepted Answer

A)  0 
B)  $7,500 
C)  $20,250 
D)  $30,000 
A)  0 
B)  $7,500 
C)  $20,250 
D)  $30,000 B

Question 3

When preparing a budgeted balance sheet,the balance for the inventory account is found on the ________.

Accepted Answer

A)  sales budget 
B)  cash budget 
C)  operating expense budget 
D)  purchases and cost of goods sold budget 
A)  sales budget 
B)  cash budget 
C)  operating expense budget 
D)  purchases and cost of goods sold budget D

Question 4

The following sales budget has been prepared:
$\begin{array}{lll}\text { Month }&\text { Cash Sales }&\text { Credit Sales }\
\text { September } & \$ 167,000 & \$ 123,000 \
\text { October } & 225,000 & 180,000 \
\text { November } & 330,000 & 210,000 \
\text { December } & 135,000 & 190,000
\end{array}$
Collections of credit sales are 50% in the month of sale,40% in the month following sale,and 10% two months following sale.No uncollectible accounts are expected.What are the estimated cash collections in December?

Accepted Answer

A)  $135,000 
B)  $197,000 
C)  $325,000 
D)  $332,000 
A)  $135,000 
B)  $197,000 
C)  $325,000 
D)  $332,000

Question 5

Sebring Company has the following data:
$\begin{array}{ll}\text { Month }&\text { Budgeted Sales }\
\text { April } & \$ 40,000 \
\text { May } & 44,000 \
\text { June } & 50,000 \
\text { July } & 52,000 \
\text { August } & 48,000
\end{array}$
The cost of goods sold percentage is 70% of sales and the desired ending inventory level is 25% of next month's sales at cost.________ was the beginning inventory on May 1.

Accepted Answer

A)  $3,300 
B)  $7,700 
C)  $8,750 
D)  $11,000 
A)  $3,300 
B)  $7,700 
C)  $8,750 
D)  $11,000

Question 6

Goller Company is preparing a cash budget for the month of June.The following information is available:
$\begin{array}{ll}
\text { Cash Balance, May 31, } 2015 & \$ 10,000 \
\text { Cash collections from customers in June } & 66,000 \
\text { Cash paid for merchandise in June } & 42,000 \
\text { Cash paid for operating expenses in June } & 12,000 \
\text { Purchase furniture for cash in June } & 3,000 \
\text { Depreciation expense in June } & 5,000 \
\text { Amortization expense in June } & 5,000
\end{array}$
The minimum cash balance desired is $10,000.What is the cash balance on June 30,2015?

Accepted Answer

A)  $9,000 
B)  $10,000 
C)  $11,000 
D)  $19,000 
A)  $9,000 
B)  $10,000 
C)  $11,000 
D)  $19,000

Question 7

The financial budget includes ________.

Accepted Answer

A)  the capital budget and the sales budget only 
B)  the capital budget and the budgeted income statement only 
C)  the capital budget, the cash budget and the budgeted balance sheet 
D)  the cash budget and the purchases budget only 
A)  the capital budget and the sales budget only 
B)  the capital budget and the budgeted income statement only 
C)  the capital budget, the cash budget and the budgeted balance sheet 
D)  the cash budget and the purchases budget only

Question 8

Which of the following is NOT a reason for budgetary slack?

Accepted Answer

A)  to buffer managers from budget cuts imposed by top management 
B)  to provide protection against cost increases or revenue shortfalls due to unforeseen events 
C)  to facilitate attainment of performance goals 
D)  to impose a formal structure for planning purposes 
A)  to buffer managers from budget cuts imposed by top management 
B)  to provide protection against cost increases or revenue shortfalls due to unforeseen events 
C)  to facilitate attainment of performance goals 
D)  to impose a formal structure for planning purposes

Question 9

Upstairs Company has the following data:
$\begin{array}{ll}\text { Month }&\text { Budgeted Sales }\
\text { January } & \$ 108,000 \
\text { February } & 132,000 \
\text { March } & 144,000 \
\text { April } & 120,000
\end{array}$
The gross profit rate is 40% of sales and ending inventory at December 31 was $19,440.Desired ending inventory levels are 30% of next month's sales at cost.What are the expected total purchases for February?

Accepted Answer

A)  $79,200 
B)  $81,360 
C)  $102,960 
D)  $105,120 
A)  $79,200 
B)  $81,360 
C)  $102,960 
D)  $105,120

Question 10

Olson Company has the following data:
 $\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\
\text { January } & \$ 225,000 \
\text { February } & 190,000 \
\text { March } & 200,000 \
\text { April } & 220,000 \
\text { May } & 150,000
\end{array}$ 
Purchases are paid as follows:
10% in the month of purchase
80% one month after purchase
10% two months after purchase
Required:
Prepare a schedule of cash disbursements for purchases for March,April and May.

Accepted Answer

The answer of Olson Company has the following data:
 \(\begin{array}{ll}\text...

Question 11

The most forward-looking and least detailed budget is the strategic plan.

Accepted Answer

A) True 
 B)False

Question 12

When preparing the budgeted income statement,which of the following is the source for the amount of operating expenses?

Accepted Answer

A)  schedule of disbursements for operating expenses 
B)  purchases budget 
C)  schedule of disbursements for purchases 
D)  operating expense budget 
A)  schedule of disbursements for operating expenses 
B)  purchases budget 
C)  schedule of disbursements for purchases 
D)  operating expense budget

Question 13

Jupiter Company has the following information:
$\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\
\text { January } & \$ 76,000 \
\text { February } & 85,000 \
\text { March } & 100,000 \
\text { April } & 79,000
\end{array}$
Budgeted Operating Expenses Per Month
$\begin{array}{ll}
\text { Wages } & \$ 15,000 \
\text { Advertising } & 12,000 \
\text { Depreciation } & 3,000 \
\text { Sales Commissions } & 4 \% \text { of sales }
\end{array}$
All cash expenses are paid as incurred.What are the budgeted total cash disbursements for operating expenses in March?

Accepted Answer

A)  $3,680 
B)  $30,000 
C)  $31,000 
D)  $34,000 
A)  $3,680 
B)  $30,000 
C)  $31,000 
D)  $34,000

Question 14

There are fewer benefits from budgeting in companies with uncertain or complicated environments.

Accepted Answer

A) True 
 B)False

Question 15

"Cooking the books" refers to recording fictitious sales or omitting costs.

Accepted Answer

A) True 
 B)False

Question 16

Slowinski Company has the following sales budget:
$\begin{array}{lll}\text { Month }&\text { Cash Sales }&\text { Credit Sales }\
\text { September } & \$ 100,000 & \$ 300,000 \
\text { October } & 125,000 & 180,000 \
\text { November } & 130,000 & 210,000 \
\text { December } & 135,000 & 190,000
\end{array}$
Collections of credit sales are 50% in the month of sale,40% in the month following sale,and 10% two months following sale.No uncollectible accounts are expected.What are the estimated cash collections in November?

Accepted Answer

A)  $130,000 
B)  $197,000 
C)  $327,000 
D)  $337,000 
A)  $130,000 
B)  $197,000 
C)  $327,000 
D)  $337,000

Question 17

Downstairs Company has the following sales budget for the last six months of 2010:
$\begin{array}{ll}
\text { July } & \$ 100,000 \
\text { August } & 80,000 \
\text { September } & 110,000 \
\text { October } & 80,000 \
\text { November } & 100,000 \
\text { December } & 94,000
\end{array}$
Historically,the cash collection of sales has been as follows:
65% of sales collected in month of sale
25% of sales collected in month following sale
8% of sales collected in second month following sale
2% of sales uncollectible
What are the expected cash collections of sales in October?

Accepted Answer

A)  $79,500 
B)  $85,900 
C)  $92,400 
D)  $99,500 
A)  $79,500 
B)  $85,900 
C)  $92,400 
D)  $99,500

Question 18

Systematically varying budget data input to determine the effects of each change on the budget is called ________ analysis.

Accepted Answer

A)  operating budget 
B)  financial budget 
C)  sensitivity 
D)  master budget 
A)  operating budget 
B)  financial budget 
C)  sensitivity 
D)  master budget

Question 19

The effectiveness of any budgeting system depends directly on the attitudes of top management toward the budgeting system.

Accepted Answer

A) True 
 B)False

Question 20

Healing Company has the following information:
$\begin{array}{ll}\text { Month }&\text { Budgeted Purchases }\
\text { January } & \$ 56,800 \
\text { February } & 49,000 \
\text { March } & 30,520 \
\text { April } & 35,480 \
\text { May } & 27,680
\end{array}$
Purchases are paid as follows:
10% in the month of purchase
50% one month after purchase
40% two months after purchase
What is the estimated cash disbursement in May from April purchases?

Accepted Answer

A)  $11,072 
B)  $11,792 
C)  $13,840 
D)  $17,740 
A)  $11,072 
B)  $11,792 
C)  $13,840 
D)  $17,740

Where does a company find forecasted financial statements for a five to ten year period?

May Company has the following information: Month Budgeted Purchases January \ 33,000 February 37,000 March 31,000 April 30,000 May 27,680 Purchases are paid as follows: 75% in the month of purchase 25% one month after purchase What is the expected balance in Accounts Payable on April 30?

When preparing a budgeted balance sheet,the balance for the inventory account is found on the ________.

Sebring Company has the following data: Month Budgeted Sales April \ 40,000 May 44,000 June 50,000 July 52,000 August 48,000 The cost of goods sold percentage is 70% of sales and the desired ending inventory level is 25% of next month's sales at cost.________ was the beginning inventory on May 1.

The financial budget includes ________.

Which of the following is NOT a reason for budgetary slack?

The most forward-looking and least detailed budget is the strategic plan.

When preparing the budgeted income statement,which of the following is the source for the amount of operating expenses?

There are fewer benefits from budgeting in companies with uncertain or complicated environments.

"Cooking the books" refers to recording fictitious sales or omitting costs.

Systematically varying budget data input to determine the effects of each change on the budget is called ________ analysis.

The effectiveness of any budgeting system depends directly on the attitudes of top management toward the budgeting system.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 7: Introduction to Budgets and Preparing the Master Budget

Where does a company find forecasted financial statements for a five to ten year period?

May Company has the following information: Month Budgeted Purchases January \ 33,000 February 37,000 March 31,000 April 30,000 May 27,680 Purchases are paid as follows: 75% in the month of purchase 25% one month after purchase What is the expected balance in Accounts Payable on April 30?

When preparing a budgeted balance sheet,the balance for the inventory account is found on the ________.

Sebring Company has the following data: Month Budgeted Sales April \ 40,000 May 44,000 June 50,000 July 52,000 August 48,000 The cost of goods sold percentage is 70% of sales and the desired ending inventory level is 25% of next month's sales at cost.________ was the beginning inventory on May 1.

The financial budget includes ________.

Which of the following is NOT a reason for budgetary slack?

The most forward-looking and least detailed budget is the strategic plan.

When preparing the budgeted income statement,which of the following is the source for the amount of operating expenses?

There are fewer benefits from budgeting in companies with uncertain or complicated environments.

"Cooking the books" refers to recording fictitious sales or omitting costs.

Systematically varying budget data input to determine the effects of each change on the budget is called ________ analysis.

The effectiveness of any budgeting system depends directly on the attitudes of top management toward the budgeting system.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters