Question 1

The final output of the operating budget is ________.

Accepted Answer

A)  budgeted statement of stockholders' equity 
B)  budgeted balance sheet 
C)  budgeted income statement 
D)  budgeted statement of cash flows 
A)  budgeted statement of stockholders' equity 
B)  budgeted balance sheet 
C)  budgeted income statement 
D)  budgeted statement of cash flows

Question 2

Santelle Company expects August sales to be $30,000.Approximately 40% of sales are cash sales.Collection of credit sales are 50% in the month of sale,40% in the month following sale and 5% two months following sale.The remaining 5% is uncollectible.________ is the expected cash collection in August from August sales.

Accepted Answer

A)  $9,000 
B)  $12,000 
C)  $21,000 
D)  $36,000 
A)  $9,000 
B)  $12,000 
C)  $21,000 
D)  $36,000

Question 3

Misalignment between the ________ stressed in budgets and ________ used to reward employees and managers can limit the advantages of budgeting.

Accepted Answer

A)  performance goals; participative goals 
B)  performance goals; performance measures 
C)  sales goals; bonuses 
D)  resource goals; bonuses 
A)  performance goals; participative goals 
B)  performance goals; performance measures 
C)  sales goals; bonuses 
D)  resource goals; bonuses

Question 4

Wininger Company is preparing a cash budget for the month of June.The following information is available:
$\begin{array}{ll}
\text { Cash Balance, May 31, } 2015 & \$ 20,000 \
\text { Cash collections from customers in June } & 46,000 \
\text { Cash paid for merchandise in June } & 42,000 \
\text { Paid operating expenses in June } & 12,000 \
\text { Purchase furniture for cash in June } & 3,000 \
\text { Depreciation expense in June } & 2,000 \
\text { Amortization expense in June } & 4,000
\end{array}$
The minimum cash balance desired is $10,000.What is the deficiency of cash before financing at June 30,2015?

Accepted Answer

A)  $(1,000) 
B)  $(3,000) 
C)  $(7,000) 
D)  $(11,000) 
A)  $(1,000) 
B)  $(3,000) 
C)  $(7,000) 
D)  $(11,000)

Question 5

Misuse of budgets can lead to incentives to cheat and lie.Cheating and lying may take the form of ________.

Accepted Answer

A)  making short-run decisions to increase profits that are not in the company's best long-run interests 
B)  budgetary slack 
C)  decreasing profits when actual profits significantly exceed the profit target 
D)  all of the above 
A)  making short-run decisions to increase profits that are not in the company's best long-run interests 
B)  budgetary slack 
C)  decreasing profits when actual profits significantly exceed the profit target 
D)  all of the above

Question 6

The first step in preparing the financial budget is the ________.

Accepted Answer

A)  cash budget 
B)  capital budget 
C)  operating expense budget 
D)  sales budget 
A)  cash budget 
B)  capital budget 
C)  operating expense budget 
D)  sales budget

Question 7

A major drawback of using historical results for judging current performance is that ________.

Accepted Answer

A)  past results may be inaccurate 
B)  results may refer to a different manager 
C)  inefficiencies may be concealed in past results 
D)  managers may have cooked the books 
A)  past results may be inaccurate 
B)  results may refer to a different manager 
C)  inefficiencies may be concealed in past results 
D)  managers may have cooked the books

Question 8

Important factors used to forecast sales for a company include all of the following items EXCEPT ________.

Accepted Answer

A)  changes in firm's prices 
B)  general economic conditions 
C)  changes in product mix 
D)  layout of production equipment 
A)  changes in firm's prices 
B)  general economic conditions 
C)  changes in product mix 
D)  layout of production equipment

Question 9

The financial budget is used by managers to ________.

Accepted Answer

A)  manage financial affairs 
B)  manage employee hiring patterns 
C)  manage the cash balance 
D)  plan for future stock dividends 
A)  manage financial affairs 
B)  manage employee hiring patterns 
C)  manage the cash balance 
D)  plan for future stock dividends

Question 10

In a master budget,the schedule of cash disbursements for operating expenses is used to prepare the ________.

Accepted Answer

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

Question 11

The two main components of the master budget are the ________.

Accepted Answer

A)  cash budget and the capital budget 
B)  purchases budget and the budgeted income statement 
C)  budgeted income statement and the budgeted balance sheet 
D)  operating budget and the financial budget 
A)  cash budget and the capital budget 
B)  purchases budget and the budgeted income statement 
C)  budgeted income statement and the budgeted balance sheet 
D)  operating budget and the financial budget

Question 12

Managers may ________ their budgeted costs or ________ their budgeted revenue to create a budget target that is easier to achieve.

Accepted Answer

A)  understate; overstate 
B)  overstate; understate 
C)  understate; understate 
D)  overstate; overstate 
A)  understate; overstate 
B)  overstate; understate 
C)  understate; understate 
D)  overstate; overstate

Question 13

The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________.

Accepted Answer

A)  the SEC; the audit committee 
B)  stockholders; creditors 
C)  lower level managers and employees; top management 
D)  creditors; stockholders 
A)  the SEC; the audit committee 
B)  stockholders; creditors 
C)  lower level managers and employees; top management 
D)  creditors; stockholders

Question 14

Cornish Company is preparing a cash budget for the month of June.The following information is available:
$\begin{array}{ll}
\text { Cash Balance, May 31, } 2015 & \$ 11,000 \
\text { Cash collections from customers in June } & 43,000 \
\text { Depreciation expense in June } & 10,000 \
\text { Cash paid for equipment in June } & 20,000 \
\text { Cash paid for merchandise in June } & 20,000 \
\text { Cash paid for operating expenses in June } & 20,000 \
\text { Cash dividend paid in June } & 5,000
\end{array}$
The minimum cash balance desired is $5,000.What are the net cash receipts and disbursements for the month of June?

Accepted Answer

A)  $(2,000) 
B)  $(3,000) 
C)  $(22,000) 
D)  $(32,000) 
A)  $(2,000) 
B)  $(3,000) 
C)  $(22,000) 
D)  $(32,000)

Question 15

Bronkov Company has the following data:
$\begin{array}{ll}\text { Month }&\text { Budgeted Sales }\
\text { May } & \$ 46,000 \
\text { June } & 50,000 \
\text { July } & 52,000 \
\text { August } & 48,000
\end{array}$
The cost of goods sold percentage is 65% of sales and the desired ending inventory level is 25% of next month's sales at cost.What are the expected total purchases for June?

Accepted Answer

A)  $17,500 
B)  $32,500 
C)  $32,825 
D)  $40,950 
A)  $17,500 
B)  $32,500 
C)  $32,825 
D)  $40,950

Question 16

Stickel Company has the following sales budget:
$\begin{array}{lll}\text { Month }&\text { Cash Sales }&\text { Credit Sales }\
\text { September } & \$ 100,000 & \$ 200,000 \
\text { October } & 125,000 & 190,000 \
\text { November } & 207,000 & 199,000 \
\text { December } & 67,000 & 144,000
\end{array}$
Collection 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 is the expected balance of Accounts Receivable at October 31?

Accepted Answer

A)  $95,000 
B)  $110,000 
C)  $115,000 
D)  $180,000 
A)  $95,000 
B)  $110,000 
C)  $115,000 
D)  $180,000

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

________ expense is driven by sales volume.

Accepted Answer

A)  Rent 
B)  Insurance 
C)  Depreciation 
D)  Sales commission 
A)  Rent 
B)  Insurance 
C)  Depreciation 
D)  Sales commission

Question 19

Budgeting can result in incentives to lie and cheat that undermine ________.

Accepted Answer

A)  a company's ethical standards 
B)  a company's value chain 
C)  standard of objectivity promulgated by the Institute of Management Accountants 
D)  none of the above 
A)  a company's ethical standards 
B)  a company's value chain 
C)  standard of objectivity promulgated by the Institute of Management Accountants 
D)  none of the above

Question 20

Which of the following statements about budgets and budgeting is FALSE?

Accepted Answer

A)  Budgets help coordinate financial and operational activities. 
B)  The vast majority of managers use budgeting as an effective cost management tool. 
C)  Budgeting is the process of formulating an organization's plans. 
D)  Managers do not use budgets for performance evaluation. 
A)  Budgets help coordinate financial and operational activities. 
B)  The vast majority of managers use budgeting as an effective cost management tool. 
C)  Budgeting is the process of formulating an organization's plans. 
D)  Managers do not use budgets for performance evaluation.

The final output of the operating budget is ________.

Misalignment between the stressed in budgets and used to reward employees and managers can limit the advantages of budgeting.

Misuse of budgets can lead to incentives to cheat and lie.Cheating and lying may take the form of ________.

The first step in preparing the financial budget is the ________.

A major drawback of using historical results for judging current performance is that ________.

Important factors used to forecast sales for a company include all of the following items EXCEPT ________.

The financial budget is used by managers to ________.

In a master budget,the schedule of cash disbursements for operating expenses is used to prepare the ________.

The two main components of the master budget are the ________.

Managers may their budgeted costs or their budgeted revenue to create a budget target that is easier to achieve.

The most effective budget processes facilitate communication from top management to and from lower level managers and employees to .

Bronkov Company has the following data: Month Budgeted Sales May \ 46,000 June 50,000 July 52,000 August 48,000 The cost of goods sold percentage is 65% of sales and the desired ending inventory level is 25% of next month's sales at cost.What are the expected total purchases for June?

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

________ expense is driven by sales volume.

Budgeting can result in incentives to lie and cheat that undermine ________.

Which of the following statements about budgets and budgeting is FALSE?

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

The final output of the operating budget is ________.

Misalignment between the ________ stressed in budgets and ________ used to reward employees and managers can limit the advantages of budgeting.

Misuse of budgets can lead to incentives to cheat and lie.Cheating and lying may take the form of ________.

The first step in preparing the financial budget is the ________.

A major drawback of using historical results for judging current performance is that ________.

Important factors used to forecast sales for a company include all of the following items EXCEPT ________.

The financial budget is used by managers to ________.

In a master budget,the schedule of cash disbursements for operating expenses is used to prepare the ________.

The two main components of the master budget are the ________.

Managers may ________ their budgeted costs or ________ their budgeted revenue to create a budget target that is easier to achieve.

The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________.

Bronkov Company has the following data: Month Budgeted Sales May \ 46,000 June 50,000 July 52,000 August 48,000 The cost of goods sold percentage is 65% of sales and the desired ending inventory level is 25% of next month's sales at cost.What are the expected total purchases for June?

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

________ expense is driven by sales volume.

Budgeting can result in incentives to lie and cheat that undermine ________.

Which of the following statements about budgets and budgeting is FALSE?

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

Misalignment between the stressed in budgets and used to reward employees and managers can limit the advantages of budgeting.

Managers may their budgeted costs or their budgeted revenue to create a budget target that is easier to achieve.

The most effective budget processes facilitate communication from top management to and from lower level managers and employees to .