Question 1

Which of the following account balances is not reported on the balance sheet?

Accepted Answer

A)  Cost of sales 
B)  Finished goods inventory 
C)  Work in progress inventory 
D)  Materials inventory 
A)  Cost of sales 
B)  Finished goods inventory 
C)  Work in progress inventory 
D)  Materials inventory A

Question 2

Which of these methods is least likely to be used to forecast sales?

Accepted Answer

A)  Field studies by market research staff 
B)  Predictions by production employees 
C)  Predictions by sales staff 
D)  Extrapolation of past sales 
A)  Field studies by market research staff 
B)  Predictions by production employees 
C)  Predictions by sales staff 
D)  Extrapolation of past sales B

Question 3

Which of the following statements is incorrect?

Accepted Answer

A)  A service provider only prepares financial budgets, not operating budgets. 
B)  A retailer prepares a budget for purchases and then a cost of sales budget. 
C)  Both retailers and manufacturers prepare income, expense, capital expenditure and cash budgets. 
D)  A manufacturer prepares a production budget, direct materials, direct labour and factory overhead budgets and then a cost of sales budget. 
A)  A service provider only prepares financial budgets, not operating budgets. 
B)  A retailer prepares a budget for purchases and then a cost of sales budget. 
C)  Both retailers and manufacturers prepare income, expense, capital expenditure and cash budgets. 
D)  A manufacturer prepares a production budget, direct materials, direct labour and factory overhead budgets and then a cost of sales budget. A

Question 4

The primary purpose of a budget is to:

Accepted Answer

A)  identify who should be promoted. 
B)  show how resources will be acquired and used. 
C)  find the cheapest source of supplies and expenses. 
D)  identify those employees that are working efficiently and those that are working inefficiently 
A)  identify who should be promoted. 
B)  show how resources will be acquired and used. 
C)  find the cheapest source of supplies and expenses. 
D)  identify those employees that are working efficiently and those that are working inefficiently

Question 5

Which of the following is not a benefit of budgeting?

Accepted Answer

A)  Motivation 
B)  Coordination 
C)  Liquidity management 
D)  It saves work for management. 
A)  Motivation 
B)  Coordination 
C)  Liquidity management 
D)  It saves work for management.

Question 6

For many companies in Australia the average profit margin could be as low as:

Accepted Answer

A)  5%. 
B)  10%. 
C)  15%. 
D)  20%. 
A)  5%. 
B)  10%. 
C)  15%. 
D)  20%.

Question 7

Southside Manufacturing is preparing its purchases budget for the 3rd quarter of the year. The following information is given in units.
$$\begin{array} { l r } 
\text { Beginning inventory } & 550 \
\text { Ending inventory } & 780 \
\text { Sales forecast for second quarter } & 1390
\end{array}$$
How many units should be purchased in the second quarter?

Accepted Answer

A)  1160 
B)  1390 
C)  1620 
D)  unable to calculate from information provided. 
A)  1160 
B)  1390 
C)  1620 
D)  unable to calculate from information provided.

Question 8

Which of the following is not a financial budget?

Accepted Answer

A)  Cash budget 
B)  Budgeted balance sheet 
C)  Capital expenditure budget 
D)  Budgeted income statement 
A)  Cash budget 
B)  Budgeted balance sheet 
C)  Capital expenditure budget 
D)  Budgeted income statement

Question 9

Which of the following is not part of the control phase of budgeting?

Accepted Answer

A)  Comparing actual performance with budget estimates. 
B)  Deciding what action should be taken. 
C)  Identifying any significant variances. 
D)  Setting goals. 
A)  Comparing actual performance with budget estimates. 
B)  Deciding what action should be taken. 
C)  Identifying any significant variances. 
D)  Setting goals.

Question 10

An example of a fixed factory overhead cost is:

Accepted Answer

A)  direct labour. 
B)  light and power. 
C)  council rates and taxes. 
D)  indirect materials. 
A)  direct labour. 
B)  light and power. 
C)  council rates and taxes. 
D)  indirect materials.

Question 11

The unit purchasing requirements for a retail entity are calculated as:

Accepted Answer

A)  forecast sales in units - desired ending inventory in units + beginning inventory in units. 
B)  forecast sales in units - desired ending inventory in units - beginning inventory in units. 
C)  forecast sales in units + desired ending inventory in units + beginning inventory in units. 
D)  forecast sales in units + desired ending inventory in units - beginning inventory in units. 
A)  forecast sales in units - desired ending inventory in units + beginning inventory in units. 
B)  forecast sales in units - desired ending inventory in units - beginning inventory in units. 
C)  forecast sales in units + desired ending inventory in units + beginning inventory in units. 
D)  forecast sales in units + desired ending inventory in units - beginning inventory in units.

Question 12

Which of the following is a typical example of a variable cost?

Accepted Answer

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

Question 13

Cash receipts information would come from the:

Accepted Answer

A)  sales budget. 
B)  direct materials budget. 
C)  capital expenditure budget. 
D)  direct labour budget. 
A)  sales budget. 
B)  direct materials budget. 
C)  capital expenditure budget. 
D)  direct labour budget.

Question 14

If estimated direct raw materials and direct labour costs are $42 000 in total, what is the direct cost per unit if forecast production is 6000 units?

Accepted Answer

A)  $7 
B)  $8 
C)  $14 
D)  $18 
A)  $7 
B)  $8 
C)  $14 
D)  $18

Question 15

Identify the unfavourable variance.

Accepted Answer

A)  Budgeted expenses $8 000; actual expenses $8 500 
B)  Budgeted loss $13 800; actual loss $8 500 
C)  Budgeted income $10 000; actual income $15 000 
D)  Budgeted expenses $13 000; actual expenses $11 000 
A)  Budgeted expenses $8 000; actual expenses $8 500 
B)  Budgeted loss $13 800; actual loss $8 500 
C)  Budgeted income $10 000; actual income $15 000 
D)  Budgeted expenses $13 000; actual expenses $11 000

Question 16

For a budget to be most effective it is best prepared from a:

Accepted Answer

A)  bottom up approach. 
B)  top down approach. 
C)  middle up approach. 
D)  middle down approach. 
A)  bottom up approach. 
B)  top down approach. 
C)  middle up approach. 
D)  middle down approach.

Question 17

The behavioural aspect of budgeting is:

Accepted Answer

A)  unimportant. 
B)  very important. 
C)  generally important. 
D)  only important for some firms. 
A)  unimportant. 
B)  very important. 
C)  generally important. 
D)  only important for some firms.

Question 18

Which of the following budgets is prepared after the cash budget?

Accepted Answer

A)  Sales Budget 
B)  Budgeted balance sheet 
C)  Capital expenditure budget 
D)  Budgeted income statement 
A)  Sales Budget 
B)  Budgeted balance sheet 
C)  Capital expenditure budget 
D)  Budgeted income statement

Question 19

The sales budget for Jim's Tents for the first three months of the year is expected to be $150 000, $140 000 and $160 000 with 20% of each month's sales being on credit. Collections of accounts receivable are scheduled at 50% during the month of sale, 45% during the month following the sale with 5% uncollectable. The total budgeted cash receipts from sales for the second month will be:

Accepted Answer

A)  $128 000 
B)  $139 500 
C)  $140 000 
D)  $143 000 
A)  $128 000 
B)  $139 500 
C)  $140 000 
D)  $143 000

Question 20

Which statement relating to the provision of motivation as a benefit of budgeting is not true?

Accepted Answer

A)  An improperly prepared budget may have an adverse effect on motivation. 
B)  To increase the chances of acceptance the budget is best approached from the bottom up. 
C)  When all levels of management participate in preparing the budget it has a better chance of acceptance. 
D)  The budgeted level of performance should be beyond that attainable with a reasonably amount of effort, to provide employees with a challenge. 
A)  An improperly prepared budget may have an adverse effect on motivation. 
B)  To increase the chances of acceptance the budget is best approached from the bottom up. 
C)  When all levels of management participate in preparing the budget it has a better chance of acceptance. 
D)  The budgeted level of performance should be beyond that attainable with a reasonably amount of effort, to provide employees with a challenge.

Exam 23: Budgeting for Planning and Control

Which of the following account balances is not reported on the balance sheet?

Which of these methods is least likely to be used to forecast sales?

Which of the following statements is incorrect?

The primary purpose of a budget is to:

Which of the following is not a benefit of budgeting?

For many companies in Australia the average profit margin could be as low as:

Southside Manufacturing is preparing its purchases budget for the 3rd quarter of the year. The following information is given in units. Beginning inventory 550 Ending inventory 780 Sales forecast for second quarter 1390 How many units should be purchased in the second quarter?

Which of the following is not a financial budget?

Which of the following is not part of the control phase of budgeting?

An example of a fixed factory overhead cost is:

The unit purchasing requirements for a retail entity are calculated as:

Which of the following is a typical example of a variable cost?

Cash receipts information would come from the:

If estimated direct raw materials and direct labour costs are $42 000 in total, what is the direct cost per unit if forecast production is 6000 units?

Identify the unfavourable variance.

For a budget to be most effective it is best prepared from a:

The behavioural aspect of budgeting is:

Which of the following budgets is prepared after the cash budget?

Which statement relating to the provision of motivation as a benefit of budgeting is not true?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Accounting for Manufacturing

Cost Accounting Systems

Cost-Volume-Profit Analysis for Decision Making

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

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