Question 1

The starting point of producing the master budget is to produce the budgets for direct materials and direct labour

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is not an advantage of zero-based budgeting?

Accepted Answer

A)  Easy to apply 
B)  Helps identify inefficient operations 
C)  Can increase staff motivation towards greater efficiency 
D)  Ensures alternatives, such as outsourcing, are considered 
A)  Easy to apply 
B)  Helps identify inefficient operations 
C)  Can increase staff motivation towards greater efficiency 
D)  Ensures alternatives, such as outsourcing, are considered A

Question 3

Which of the following statements are correct,with regards to budgeting?
(i) The budget must be set centrally
(ii)Budgets should never be exceeded
(iii)There are financial rules governing the layout and calculations of a budget,eg once set,a budget cannot be altered

Accepted Answer

A)  (ii) only 
B)  (ii) and (iii) 
C)  They are all false 
D)  They are all true 
A)  (ii) only 
B)  (ii) and (iii) 
C)  They are all false 
D)  They are all true C

Question 4

A budget includes all of the following except:

Accepted Answer

A)  A plan, quantified in monetary terms 
B)  A plan outlining income generated and/or expenditure incurred during a period of time 
C)  A plan which guarantees future profit 
D)  A plan outlining capital employed in obtaining a given objective 
A)  A plan, quantified in monetary terms 
B)  A plan outlining income generated and/or expenditure incurred during a period of time 
C)  A plan which guarantees future profit 
D)  A plan outlining capital employed in obtaining a given objective

Question 5

Which of the following is not a disadvantage usually associated with budgeting?

Accepted Answer

A)  Encourages "budget slack" 
B)  Discourages delegation and the identification of management responsibility 
C)  In practice, it is often difficult to come to an agreement about the organizations objectives 
D)  Can often be a "paperwork exercise" not fully understood by mangers 
A)  Encourages "budget slack" 
B)  Discourages delegation and the identification of management responsibility 
C)  In practice, it is often difficult to come to an agreement about the organizations objectives 
D)  Can often be a "paperwork exercise" not fully understood by mangers

Question 6

Which of the following is not an advantage usually associated with budgeting?

Accepted Answer

A)  Can be used to motivate staff 
B)  Can be used to evaluate performance 
C)  Encourages managers to "spend up to budget" 
D)  Helps identify "limiting factors", such as production capacity 
A)  Can be used to motivate staff 
B)  Can be used to evaluate performance 
C)  Encourages managers to "spend up to budget" 
D)  Helps identify "limiting factors", such as production capacity

Question 7

A cash budget includes receipts that don't appear in the income statement

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is false?

Accepted Answer

A)  Receipts from sales on the cash budget will different from sales reported in the income statement 
B)  A cash budget may include receipts such as the issue of shares 
C)  An income statement shows payment of expenses when payment is actually made 
D)  An income statement shows money as a receipt when it is earned 
A)  Receipts from sales on the cash budget will different from sales reported in the income statement 
B)  A cash budget may include receipts such as the issue of shares 
C)  An income statement shows payment of expenses when payment is actually made 
D)  An income statement shows money as a receipt when it is earned

Question 9

XYZ company had budget sales of £120,000,direct materials of £40,000 and direct labour of £30,000.Actual sales where 25% up on budget.Calculate the flexed budget figures for XYZ company.

Accepted Answer

A)  Sales £120,000, direct materials £40,000 and direct labour £30,000 
B)  Sales £120,000, direct materials £50,000 and direct labour £37,500 
C)  Sales £150,000, direct materials £50,000 and direct labour £37,500 
D)  Sales £150,000, direct materials £40,000 and direct labour £30,000 
A)  Sales £120,000, direct materials £40,000 and direct labour £30,000 
B)  Sales £120,000, direct materials £50,000 and direct labour £37,500 
C)  Sales £150,000, direct materials £50,000 and direct labour £37,500 
D)  Sales £150,000, direct materials £40,000 and direct labour £30,000

Question 10

The difference between a fixed budget and a flexible budget is:

Accepted Answer

A)  A fixed budget assumes a given level of production and sales and a flexible budget can accommodate different levels of production 
B)  A fixed budget considers fixed costs only, a flexible budget considers fixed and variable costs of production 
C)  A fixed budget is for a single department, a flexible budget covers a range of departments and units 
D)  A fixed budget is modified annually, a flexible budget is modified monthly 
A)  A fixed budget assumes a given level of production and sales and a flexible budget can accommodate different levels of production 
B)  A fixed budget considers fixed costs only, a flexible budget considers fixed and variable costs of production 
C)  A fixed budget is for a single department, a flexible budget covers a range of departments and units 
D)  A fixed budget is modified annually, a flexible budget is modified monthly

Question 11

Which of the following is not an advantage associated with a budget control system?

Accepted Answer

A)  Ensures competition for resources within an organization 
B)  Ensures the objectives of an organization are defined 
C)  Facilitates the delegation of responsibility 
D)  Improves communication and coordination 
A)  Ensures competition for resources within an organization 
B)  Ensures the objectives of an organization are defined 
C)  Facilitates the delegation of responsibility 
D)  Improves communication and coordination

Question 12

A typical set of budgets in an organization will include:

Accepted Answer

A)  Sales budget, production budget and direct materials budget 
B)  Direct labour budget, production overhead budget and distribution budget 
C)  Budget income statement, capital expenditure budget and cash budget 
D)  All of the above 
A)  Sales budget, production budget and direct materials budget 
B)  Direct labour budget, production overhead budget and distribution budget 
C)  Budget income statement, capital expenditure budget and cash budget 
D)  All of the above

Question 13

When building a cash budget,the following items are budgeted for the first quarter:
 
20% of all sales are cash sales.The remaining sales are on credit and customers have 30 days to pay.
All purchases are made on credit and paid after 2 months.
Wages are paid in the month they are incurred.
Other Expenses include depreciation at £1,000 per month.
What is the expected net cashflow in March?

Accepted Answer

A)  £1,500 
B)  £6,500 
C)  £4,100 
D)  £3,100 
A)  £1,500 
B)  £6,500 
C)  £4,100 
D)  £3,100

Question 14

When setting budgets,the lead budget (the one to start with)and most important budgets are usually:

Accepted Answer

A)  "Sales" is the lead budget and "Cash" the most important 
B)  "Cash" is the lead budget and "Profit" the most important 
C)  "Production" is the lead budget and "Sales" the most important 
D)  "Cash" is the lead budget and "The Master Budget" the most important 
A)  "Sales" is the lead budget and "Cash" the most important 
B)  "Cash" is the lead budget and "Profit" the most important 
C)  "Production" is the lead budget and "Sales" the most important 
D)  "Cash" is the lead budget and "The Master Budget" the most important

Question 15

Budgetary control includes all of the following except:

Accepted Answer

A)  The development and implementation of a budget by one key individual 
B)  The continuous comparison of actual with budget results 
C)  Providing a basis for revising the budget 
D)  Establishing the responsibilities of executives 
A)  The development and implementation of a budget by one key individual 
B)  The continuous comparison of actual with budget results 
C)  Providing a basis for revising the budget 
D)  Establishing the responsibilities of executives

Question 16

Which approach to producing a budget,associated with the public sector,requires the identification of programmes and the allocation of resources to each programme?

Accepted Answer

A)  Planning, programming budgeting system (PPBS) 
B)  Zero-based budgeting (ZB
B)  
C)  Incremental budget 
D)  Performance budget 
A)  Planning, programming budgeting system (PPBS) 
B)  Zero-based budgeting (ZB
B)  
C)  Incremental budget 
D)  Performance budget

Question 17

Usually the actual results achieved by an organization will be different from what had been planned

Accepted Answer

A) True 
 B)False

Question 18

A cash budget does not include tax and interest to be paid

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is false?

Accepted Answer

A)  A capital expenditure budget will show costs not directly linked to production such as distribution costs 
B)  A capital expenditure budget will show costs not directly linked to production such as administration costs 
C)  A capital expenditure budget will show the planned expenditure associated with an increase in production facilities 
D)  A capital expenditure budget will show the planned expenditure for direct materials 
A)  A capital expenditure budget will show costs not directly linked to production such as distribution costs 
B)  A capital expenditure budget will show costs not directly linked to production such as administration costs 
C)  A capital expenditure budget will show the planned expenditure associated with an increase in production facilities 
D)  A capital expenditure budget will show the planned expenditure for direct materials

Question 20

Which of the following statements is correct?

Accepted Answer

A)  In a large organization, budgets may be required for different products 
B)  In a large organization, budgets may be required for the advertising department 
C)  In a large organization, budgets may be required for the human resource department 
D)  All of the above statements are correct 
A)  In a large organization, budgets may be required for different products 
B)  In a large organization, budgets may be required for the advertising department 
C)  In a large organization, budgets may be required for the human resource department 
D)  All of the above statements are correct

The starting point of producing the master budget is to produce the budgets for direct materials and direct labour

Which of the following is not an advantage of zero-based budgeting?

Which of the following statements are correct,with regards to budgeting? (i) The budget must be set centrally (ii)Budgets should never be exceeded (iii)There are financial rules governing the layout and calculations of a budget,eg once set,a budget cannot be altered

A budget includes all of the following except:

Which of the following is not a disadvantage usually associated with budgeting?

Which of the following is not an advantage usually associated with budgeting?

A cash budget includes receipts that don't appear in the income statement

Which of the following is false?

XYZ company had budget sales of £120,000,direct materials of £40,000 and direct labour of £30,000.Actual sales where 25% up on budget.Calculate the flexed budget figures for XYZ company.

The difference between a fixed budget and a flexible budget is:

Which of the following is not an advantage associated with a budget control system?

A typical set of budgets in an organization will include:

When setting budgets,the lead budget (the one to start with)and most important budgets are usually:

Budgetary control includes all of the following except:

Which approach to producing a budget,associated with the public sector,requires the identification of programmes and the allocation of resources to each programme?

Usually the actual results achieved by an organization will be different from what had been planned

A cash budget does not include tax and interest to be paid

Which of the following statements is false?

Which of the following statements is correct?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters

Exam 15: Budgetary Planning and Control

The starting point of producing the master budget is to produce the budgets for direct materials and direct labour

Which of the following is not an advantage of zero-based budgeting?

Which of the following statements are correct,with regards to budgeting? (i) The budget must be set centrally (ii)Budgets should never be exceeded (iii)There are financial rules governing the layout and calculations of a budget,eg once set,a budget cannot be altered

A budget includes all of the following except:

Which of the following is not a disadvantage usually associated with budgeting?

Which of the following is not an advantage usually associated with budgeting?

A cash budget includes receipts that don't appear in the income statement

Which of the following is false?

XYZ company had budget sales of £120,000,direct materials of £40,000 and direct labour of £30,000.Actual sales where 25% up on budget.Calculate the flexed budget figures for XYZ company.

The difference between a fixed budget and a flexible budget is:

Which of the following is not an advantage associated with a budget control system?

A typical set of budgets in an organization will include:

When setting budgets,the lead budget (the one to start with)and most important budgets are usually:

Budgetary control includes all of the following except:

Which approach to producing a budget,associated with the public sector,requires the identification of programmes and the allocation of resources to each programme?

Usually the actual results achieved by an organization will be different from what had been planned

A cash budget does not include tax and interest to be paid

Which of the following statements is false?

Which of the following statements is correct?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters