Question 1

Purchases for May were $104,000,while expected purchases for June and July are $121,000 and $139,000,respectively.All purchases are paid 75% in the month of purchase and 25% the following month.Calculate the budgeted payments for the month of June.

Accepted Answer

A)  $121,000 
B)  $108,250 
C)  $30,250 
D)  $116,750

Question 2

Nobell Ltd has a cash balance of $22,000 on 1 April 2017.It is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows:
$\begin{array}{|l|l|l|l|} 
\hline& \text { Apr } & \text { May } & \text { Jun } \
\hline \text { Cash collections } & \$ 20,000 & \$ 22,000 & \$ 25,000 \
\hline \text { Cash payments } & & &\
\hline \text { Purchases of inventory } & 5300 & 5800 & 4000 \
\hline \text { Operating expenses } & 6000 & 3500 & 6000\
\hline
\end{array}$

There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of April.

Accepted Answer

A)  $42,000 
B)  $30,700 
C)  $36,700 
D)  $20,000

Question 3

Which of the following statements is TRUE about the operating budget?

Accepted Answer

A)  Its final component is the cash budget. 
B)  It includes the capital expenditures budget. 
C)  It includes the operating expenses budget. 
D)  It is a part of the financial budget.

Question 4

In preparing an operating budget,the sales budget is prepared first.Which of the following is the last component of the operating budget?

Accepted Answer

A)  Inventory, purchases and cost of sales 
B)  Electricity and gas 
C)  Capital expenditures 
D)  Budgeted income statement

Question 5

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet.To provide the balance for Retained earnings,which document should be used?

Accepted Answer

A)  Budgeted income statement 
B)  Cash budget 
C)  Inventory, purchases and cost of sales budget 
D)  Budgeted cash payments for purchases

Question 6

Some of the costs of a service company are called period costs and others are non-service costs.

Accepted Answer

A) True 
 B)False

Question 7

Fireox Company's selected cost data for 2017 are shown below:
$$\begin{array} { | l | l | } 
\hline \text { Cost of goods manufactured } & \$ 147,700 \
\hline \text { Work in process inventory, } 1 \text { Jan } 2017 & 19,000 \
\hline \text { Work in process inventory, 31 Dec } 2017 & 20,500 \
\hline \text { Direct materials used } & 18,100 \
\hline
\end{array}$$
What is the total of manufacturing costs incurred by Fireox Company in 2017?

Accepted Answer

A)  $149,200 
B)  $146,200 
C)  $37,100 
D)  $21,400

Question 8

Inventoriable product costs only include the costs to get the inventory in the warehouse.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is NOT a part of manufacturing overhead?

Accepted Answer

A)  Indirect labour 
B)  Indirect materials 
C)  Depreciation on delivery vehicles 
D)  Factory insurance

Question 10

Management is accountable to various government bodies in which of the following ways?

Accepted Answer

A)  Providing a return on the stakeholders' investment 
B)  Obeying laws and regulations, and paying taxes 
C)  Making timely payments to creditors 
D)  Making timely payments to vendors

Question 11

Damsel Ltd is a large manufacturer of car tyres.Damsel has provided the following information:
$$\begin{array} { | l | l | } 
\hline \text { Sales revenue } & \$ 50,000 \
\hline \text { Beginning finished goods inventory } & 19,000 \
\hline \text { Cost of sales } & 36,000 \
\hline \text { Cost of goods manufactured } & 45,500 \
\hline
\end{array}$$
Calculate the amount of ending finished goods inventory reported in Damsel's balance sheet.

Accepted Answer

A)  $64,500 
B)  $9500 
C)  $4500 
D)  $28,500

Question 12

Which of the following is an example of the coordination and communication function of a budget?

Accepted Answer

A)  Budget figures are used to evaluate the performance of managers. 
B)  Employees are motivated to achieve the goals set by the budget. 
C)  The budget outlines a specific course of action for the coming period. 
D)  A budget requires integrated input from different business units and functions.

Question 13

June sales were $33,000,while projected sales for July and August were $45,000 and $69,000,respectively.Sales are 40% cash and 60% credit.All credit sales are collected in the month following the sale.Calculate expected collections for July.

Accepted Answer

A)  $19,800 
B)  $37,800 
C)  $18,000 
D)  $40,200

Question 14

Which of the following is a characteristic of a service company?

Accepted Answer

A)  It has a single category of inventory. 
B)  It does not have tangible products intended for sale. 
C)  It makes a product. 
D)  It transforms raw materials into finished goods.

Question 15

Which of the following properly describes the accounting for factory depreciation?

Accepted Answer

A)  Factory depreciation is an inventoriable product cost and is expensed as incurred. 
B)  Factory depreciation is a period cost and is expensed as incurred. 
C)  Factory depreciation is a period cost and is expensed when the manufactured product is sold. 
D)  Factory depreciation is an inventoriable product cost and is expensed when the manufactured product is sold.

Question 16

Management must get employees to accept the budget's goals in order to effectively use the budget as a benchmark for evaluating performance.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following could be found on the income statement of a service company?

Accepted Answer

A)  Cost of goods manufactured 
B)  Manufacturing overhead 
C)  Rent expense 
D)  Cost of sales

Question 18

What is the name given to software systems that can integrate all of a company's worldwide functions,departments and data into a single system?

Accepted Answer

A)  E-commerce 
B)  Total quality management (TQM) 
C)  Just-in-time inventory management (JIT) 
D)  Enterprise resource planning (ERP)

Question 19

Which of the following formulas represents cost of sales for a retailing business?

Accepted Answer

A)  Beginning inventory + purchases and freight in - ending inventory = cost of sales 
B)  Purchases and freight in - ending inventory = cost of sales 
C)  Ending inventory + purchases and freight in - beginning inventory = cost of sales 
D)  Beginning inventory - ending inventory = cost of sales

Question 20

Crystal Ltd is a retailer of stone ornaments.It sold 15 000 units in 2017.The company has provided the following information:
$$\begin{array} { | l | l | } 
\hline \text { Sales revenue } & \$ 535,000 \
\hline \text { Purchases (excluding freight in) } & 305,500 \
\hline \text { Selling and administrative expenses } & 37,000 \
\hline \text { Freight in } & 15,500 \
\hline \text { Beginning inventory } & 43,500 \
\hline \text { Ending inventory } & 59,500 \
\hline
\end{array}$$
How much is the gross profit for 2017?

Accepted Answer

A)  $305,000 
B)  $230,000 
C)  $229,500 
D)  $267,000

Exam 19: Introduction to Managerial Accounting and the Master Budget

Purchases for May were $104,000,while expected purchases for June and July are $121,000 and $139,000,respectively.All purchases are paid 75% in the month of purchase and 25% the following month.Calculate the budgeted payments for the month of June.

Which of the following statements is TRUE about the operating budget?

In preparing an operating budget,the sales budget is prepared first.Which of the following is the last component of the operating budget?

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet.To provide the balance for Retained earnings,which document should be used?

Some of the costs of a service company are called period costs and others are non-service costs.

Inventoriable product costs only include the costs to get the inventory in the warehouse.

Which of the following is NOT a part of manufacturing overhead?

Management is accountable to various government bodies in which of the following ways?

Which of the following is an example of the coordination and communication function of a budget?

June sales were $33,000,while projected sales for July and August were $45,000 and $69,000,respectively.Sales are 40% cash and 60% credit.All credit sales are collected in the month following the sale.Calculate expected collections for July.

Which of the following is a characteristic of a service company?

Which of the following properly describes the accounting for factory depreciation?

Management must get employees to accept the budget's goals in order to effectively use the budget as a benchmark for evaluating performance.

Which of the following could be found on the income statement of a service company?

What is the name given to software systems that can integrate all of a company's worldwide functions,departments and data into a single system?

Which of the following formulas represents cost of sales for a retailing business?