Question 1

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. C

Question 2

There are three major subgroups of the master budget. These are ________________________, ___________________, and _______________________.

Accepted Answer

Operating Budgets; Capital Expenditure Budgets; Financial Budgets

Question 3

What is a sales budget? How is the sales budget prepared?

Accepted Answer

The sales budget shows planned sales units and the expected dollars from those sales. It is generally the starting point in the budgeting process. The sales budget is based on a careful analysis of forecasted economic and market conditions, business capacity, and proposed selling expenses such as advertising.

Question 4

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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. Total June sales are anticipated to be:

Accepted Answer

A)  $63,000 
B)  $67,500 
C)  $61,250 
D)  $74,250 
E)  $60,000 
A)  $63,000 
B)  $67,500 
C)  $61,250 
D)  $74,250 
E)  $60,000

Question 7

The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A merchandise purchases budget is used t

Question 9

What are rolling budgets? Why are rolling budgets prepared?

Accepted Answer

Each month, a company might revise its b

Question 10

A company's data is presented below. Desired ending inventory is a consistent percentage of the next quarter's sales and the previous year's 4th quarter ending inventory of 560 units meets this requirement. Compute the expected production in the 3rd Quarter of the current year.
$$\begin{array} { l l l l l } 
\text { Quarter } & 1 & 2 & 3 & 4 \
\text { Expected Sales Units } & 7,000 & 5,000 & 8,000 & 6,000 \
\text { Units Produced } & 6,840 & ? & ? & ?
\end{array}$$

Accepted Answer

A)  7,840 
B)  8,160 
C)  8,000 
D)  8,480 
E)  7,360 
A)  7,840 
B)  8,160 
C)  8,000 
D)  8,480 
E)  7,360

Question 11

Lingstat Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 15% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 5,000 units, 6,000 units, and 4,000 units, respectively. How many units must be purchased in September?

Accepted Answer

A)  6,600 
B)  6,150 
C)  5,850 
D)  5,700 
E)  6,300 
A)  6,600 
B)  6,150 
C)  5,850 
D)  5,700 
E)  6,300

Question 12

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

@#IMG-DLM&
* $3,600 x 1% = $36

Question 13

The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.

Accepted Answer

A) True 
 B)False

Question 14

A company expects its September sales to be 15% higher than its August sales of $140,000. Purchases were $75,000 in August and are expected to be $85,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $71,500. The ending cash balance on September 30 would be:

Accepted Answer

A)  $121,800 
B)  $148,700 
C)  $140,300 
D)  $143,700 
E)  $135,300 
A)  $121,800 
B)  $148,700 
C)  $140,300 
D)  $143,700 
E)  $135,300

Question 15

A budget can be an effective means of communicating management's plans to the employees of a business.

Accepted Answer

A) True 
 B)False

Question 16

Clic, Inc. provides the following data for the next four months:  
Desired Ending Inventory:
Raw Materials = 30% of next month's production needs
Finished Goods = 20% of next month's sales
Pounds of raw material required for each finished Unit = 5 lbs.
Direct labor hours per unit = 0.5 hrs
Direct labor rate = $12/hour
Required:
(a) Calculate the budgeted production for April and May.
(b) Calculate the amount of purchases of raw materials in pounds for April and May.
(c) Calculate the cost of direct labor for May.

Accepted Answer

The answer of Clic, Inc. provides the following data for...

Question 17

Lara Company has budgeted the following credit sales during the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000. Experience has shown that payment for the credit sales is received as follows: 15% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 5% is uncollectible. How much cash can Lara Company expect to collect in November as a result of current and past credit sales?

Accepted Answer

A)  $19,700 
B)  $28,500 
C)  $30,000 
D)  $31,100 
E)  $33,900 
A)  $19,700 
B)  $28,500 
C)  $30,000 
D)  $31,100 
E)  $33,900

Question 18

Which of the following is not a benefit derived from budgeting?

Accepted Answer

A)  Budgeting focuses management's attention on the future. 
B)  Budgeting provides coordination of departments. 
C)  Budgeting provides a basis for evaluating performance. 
D)  Budgeting provides motivation for managers and employees. 
E)  Budgeting assures the achievement of all goals. 
A)  Budgeting focuses management's attention on the future. 
B)  Budgeting provides coordination of departments. 
C)  Budgeting provides a basis for evaluating performance. 
D)  Budgeting provides motivation for managers and employees. 
E)  Budgeting assures the achievement of all goals.

Question 19

There are at least five benefits from budgeting. Identify two of these benefits:
(1) _______________________________________
(2) _______________________________________

Accepted Answer

Promotes Analysis an

Question 20

Briefly describe the process by which budgets are developed and administered.

Accepted Answer

Budgets are developed in a bottom-up pro

Preparing a master budget is usually the responsibility of:

There are three major subgroups of the master budget. These are ______________, _, and _______________.

What is a sales budget? How is the sales budget prepared?

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

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. Total June sales are anticipated to be:

The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets.

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

What are rolling budgets? Why are rolling budgets prepared?

The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.

A budget can be an effective means of communicating management's plans to the employees of a business.

Which of the following is not a benefit derived from budgeting?

There are at least five benefits from budgeting. Identify two of these benefits: (1) _ (2) _

Briefly describe the process by which budgets are developed and administered.

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 and Analyzing Cash Flows

Analyzing Financial Statements

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

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

Exam 20: Master Budgets and Performance Planning

Preparing a master budget is usually the responsibility of:

There are three major subgroups of the master budget. These are ________________________, ___________________, and _______________________.

What is a sales budget? How is the sales budget prepared?

A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.

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. Total June sales are anticipated to be:

The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets.

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

What are rolling budgets? Why are rolling budgets prepared?

The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.

A budget can be an effective means of communicating management's plans to the employees of a business.

Which of the following is not a benefit derived from budgeting?

There are at least five benefits from budgeting. Identify two of these benefits: (1) _______________________________________ (2) _______________________________________

Briefly describe the process by which budgets are developed and administered.

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 and Analyzing Cash Flows

Analyzing Financial Statements

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

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

There are three major subgroups of the master budget. These are ______________, _, and _______________.

There are at least five benefits from budgeting. Identify two of these benefits: (1) _ (2) _