Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

What is a manufacturing budget?

Accepted Answer

A manufacturing budget shows t

Question 4

In preparing a budgeted balance sheet,the amount for Accounts Receivable is primarily determined from:

Accepted Answer

A)  The purchase budget. 
B)  The sales budget. 
C)  The capital expenditures budget. 
D)  The budgeted income statement. 
E)  The selling expenses budget. 
A)  The purchase budget. 
B)  The sales budget. 
C)  The capital expenditures budget. 
D)  The budgeted income statement. 
E)  The selling expenses budget.

Question 5

The process of evaluating performance can be improved by using budgets.

Accepted Answer

A) True 
 B)False

Question 6

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.

Accepted Answer

A) True 
 B)False

Question 7

A budget is a formal statement of future plans,usually expressed in monetary terms.

Accepted Answer

A) True 
 B)False

Question 8

A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.The desired ending inventory of units is 15% higher than the beginning inventory of 1,000 units.Merchandise purchases for June are projected to include how many units?

Accepted Answer

A)  6,000 units 
B)  6,150 units 
C)  5,850 units 
D)  7,150 units 
E)  6,500 units 
A)  6,000 units 
B)  6,150 units 
C)  5,850 units 
D)  7,150 units 
E)  6,500 units

Question 9

Which of the following factors is least likely to be considered in preparing a sales budget?

Accepted Answer

A)  Plant capacity. 
B)  General economic and industry conditions. 
C)  Past sales volume. 
D)  The capital expenditures budget. 
E)  Proposed selling expenses, such as advertising. 
A)  Plant capacity. 
B)  General economic and industry conditions. 
C)  Past sales volume. 
D)  The capital expenditures budget. 
E)  Proposed selling expenses, such as advertising.

Question 10

A plan that lists the types and amounts of general and administrative expenses expected during the budget period is referred to as a:

Accepted Answer

A)  General and administrative expense budget. 
B)  Sales budget. 
C)  Cash payments budget. 
D)  Overhead budget. 
E)  Selling expense budget. 
A)  General and administrative expense budget. 
B)  Sales budget. 
C)  Cash payments budget. 
D)  Overhead budget. 
E)  Selling expense budget.

Question 11

The __________________________ shows expected cash inflows and outflows during the budget period.

Accepted Answer

The answer of The __________________________ shows expected cash inflows and...

Question 12

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 13

Which of the following budgets is not an operating budget?

Accepted Answer

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

Question 14

Blaircraft Company manufactures a product that requires five pounds of raw material for each unit produced.For the next year,beginning inventory of raw materials is 8,000 pounds.The raw materials inventory at the end of each quarter should be 15% of the next quarter's raw materials needed for production.Given the projected production in units below,what is the quantity of raw materials that needs to be purchased for the third quarter?
$$\begin{array} { l l l l l } 
\text { Quarter } & 1 & 2 & 3 & 4 \
\text { Expected production } & 7,00 & 5,00 & 8,00 & 6,00 \
\text { Units } & 0 & 0 & 0 & 0
\end{array}$$

Accepted Answer

A)  41,500 pounds 
B)  40,000 pounds 
C)  38,500 pounds 
D)  7,7000 pounds 
E)  8,300 pounds 
A)  41,500 pounds 
B)  40,000 pounds 
C)  38,500 pounds 
D)  7,7000 pounds 
E)  8,300 pounds

Question 15

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 16

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for the fourth quarter should be:

Accepted Answer

A)  $134,000 
B)  $109,000 
C)  $91,500 
D)  $25,000 
E)  $91,000 
A)  $134,000 
B)  $109,000 
C)  $91,500 
D)  $25,000 
E)  $91,000

Question 17

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 18

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 19

What is a merchandise purchases budget? How is the merchandise purchases budget constructed?

Accepted Answer

A merchandise purchases budget is used t

Question 20

Which of the following statements about budgeting is false?

Accepted Answer

A)  Budgeting is an aid to planning and control. 
B)  Budgets create standards for performance evaluation. 
C)  Budgets help coordinate the activities of the entire organization. 
D)  Budgeting forces managers to think ahead and formalize long-range objectives. 
E)  The master budget should only be prepared by top management. 
A)  Budgeting is an aid to planning and control. 
B)  Budgets create standards for performance evaluation. 
C)  Budgets help coordinate the activities of the entire organization. 
D)  Budgeting forces managers to think ahead and formalize long-range objectives. 
E)  The master budget should only be prepared by top management.

Exam 20: Master Budgets and Performance Planning

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

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

What is a manufacturing budget?

In preparing a budgeted balance sheet,the amount for Accounts Receivable is primarily determined from:

The process of evaluating performance can be improved by using budgets.

Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating nonvalue-added activities.

A budget is a formal statement of future plans,usually expressed in monetary terms.

A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit.The desired ending inventory of units is 15% higher than the beginning inventory of 1,000 units.Merchandise purchases for June are projected to include how many units?

Which of the following factors is least likely to be considered in preparing a sales budget?

A plan that lists the types and amounts of general and administrative expenses expected during the budget period is referred to as a:

The __________________________ shows expected cash inflows and outflows during the budget period.

Operating budgets include all the following budgets except the:

Which of the following budgets is not an operating budget?

Preparing a master budget is usually the responsibility of:

Barrett's Fashions forecasts sales of $125,000 for the quarter ended December 31.Its gross profit rate is 20% of sales,and its September 30 inventory is $32,500.If the December 31 inventory is targeted at $41,500,budgeted purchases for the fourth quarter should be:

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:

What is a merchandise purchases budget? How is the merchandise purchases budget constructed?

Which of the following statements about budgeting is false?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Time Value of Money

Investments and International Operations

Accounting for Partnerships

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