Question 1

To enable the budget to be used as a control tool to monitor financial performance the master budget should classify items in the same format as an entity's __________ ___ ____________.

Accepted Answer

chart of accounts

Question 2

For a retail entity,the key variable which is normally the starting point for the budget process and upon which many other items are based is:

Accepted Answer

A)   labour.
B)   sales.
C)   production.
D)   fixed expenses. B

Question 3

The purchases budget sets the required level of inventory or direct materials for merchandising or _________________ entities.

Accepted Answer

manufacturing

Question 4

Preparing budget targets through a process of discussion and negotiation between senior managers and unit managers is the ______________ style of budgeting.

Accepted Answer

The answer of Preparing budget targets through a process of...

Question 5

The strategic planning process relates to:

Accepted Answer

A)   shorter term planning (usually less than 1 year) .
B)   longer term planning (often 3 to 5 years) .
C)   shorter term planning (usually 1 to 3 months) .
D)   large entities only.

Question 6

A review of the financial performance for the month of July noted the following:
$\begin{array}{|l|r|r|}
\hline \text{ Account } & \text{ Budget } & \text{ Actual } \
\hline \text{  Bank balance at 1 July }&  \$ 8000 &  \$ 8000 \
\hline  \text{ Total cash payments} & \$ 12000  &\$ 10200  \
\hline  \text{ Total cash receipts }&\$ 25000  & \$ 21500  \
\hline
\end{array}$
The actual bank balance and variance at 31 July is:

Accepted Answer

A)   bank balance $(3300) , Variance $1700 F.
B)   bank balance $(3300) , Variance $1700 U.
C)   bank balance $19 300, Variance $1700 F.
D)   bank balance $19 300, Variance $1700 U.

Question 7

The government's Department of Education and Training would be unlikely to prepare which type of budget?

Accepted Answer

A)   Production budget.
B)   Expenses budget.
C)   Cash budget.
D)   Program budget.

Question 8

A program budget is commonly used in the __________ and not-for-profit sector.

Accepted Answer

The answer of A program budget is commonly used in...

Question 9

The cash budget shows the ____________ future cash receipts and cash payments.

Accepted Answer

The answer of The cash budget shows the ____________ future...

Question 10

A budget that estimates the overheads and expenses associated with production activities is known as a:

Accepted Answer

A)   departmental budget.
B)   master budget.
C)   manufacturing overhead budget.
D)   operating budget.

Question 11

An unfavourable variance occurs when:

Accepted Answer

A)   actual expenses are less than budgeted expenses.
B)   budgeted expenses are greater than actual expenses.
C)   actual sales are higher than budgeted sales.
D)   budgeted sales are higher than actual sales.

Question 12

The budget that sets the expected level of activity for the budget period is the ______________ or ______________ budget.

Accepted Answer

The answer of The budget that sets the expected level...

Question 13

Which of these is not a commonly prepared budget?

Accepted Answer

A)   Asset amortisation budget.
B)   Operating budget.
C)   Manufacturing overhead budget.
D)   Inventory budget.

Question 14

From the following data calculate the estimated cash received from total sales for the month of June.
Total sales for April,$42 000; May,$54 000; June,$38 000.
Credit sales are normally settled in the pattern: 50% in the month of sale,40% in the first month following the sale,and the balance in the second month following the sale.

Accepted Answer

A)   $44 800
B)   $25 800
C)   $19 000
D)   $40 600

Question 15

From the following options,select the budgets and the order in which they would be prepared,when developing an operating budget for a hair salon.

Accepted Answer

A)   Sales budget, materials budget, operating expenses budget.
B)   Production budget, sales budget, operating expenses budget.
C)   Sales budget, labour budget, operating expenses budget.
D)   Sales budget, production budget, labour budget.

Question 16

Having a budget that directly links employee bonuses with sales targets may lead to:

Accepted Answer

A)   a culture among sales staff where sales targets are to be achieved regardless of the consequences.
B)   a change of focus of sales staff away from that of customer satisfaction.
C)   unfavourable variances in budgeted expenses.
D)   all of the above.

Question 17

Throughout the budgeting process,participation may be sought from the managers who are in control of the entity's ______________ centres.

Accepted Answer

The answer of Throughout the budgeting process,participation may be sought...

Question 18

T.Bailey Pty Ltd is planning to purchase equipment costing $45 000.The planned delivery date is 11 April with settlement on that date.On 17 January,T.Bailey Pty Ltd paid a deposit of $15 000.The amount that will appear in the cash budget for the quarter ending 31 March is:

Accepted Answer

A)   $0. No cash flows are recorded until settlement date.
B)   outflow of $30 000.
C)   outflow of $15 000.
D)   outflow of $45 000.

Question 19

Budgets provide the financial frameworks for an entity's _______________ plan.

Accepted Answer

The answer of Budgets provide the financial frameworks for an...

Question 20

The schedule of receipts from accounts receivable (debtors)is prepared to provide information for the:

Accepted Answer

A)   cash budget.
B)   sales budget.
C)   production budget.
D)   budgeted balance sheet.

Exam 9: Budgeting

To enable the budget to be used as a control tool to monitor financial performance the master budget should classify items in the same format as an entity's ________ _ ____________.