0% (0 out of 29 correct)

Responses to questions are indicated by the

symbol.

1. Budgeting facilitates the coordination of activities within the business by correlating the
goals of each segment with overall company objectives.
A. True
B. False
This statement is correct.

2. Which one of the following is not a benefit of budgeting?

A. It facilitates the coordination of activities.
B. It provides definite objectives for evaluating performance.
C. It provides assurance that the company will achieve its objectives.
D. It requires all levels of management to plan ahead on a recurring basis.

3. Which one of the following is a primary benefit of budgeting?

A. It removes the 'plan ahead' from lower level managers so that they can focus on
operations.
B. It provides definite objectives for evaluating performance.
C. It eliminates potential problems so that managers do not need to be concerned that
things may get out of hand.
D. It eliminates the need for coordination of activities throughout the company.

4. Which of the following is not a benefit of budgeting?

A. Management can plan ahead.
B. An early warning system is provided for potential problems.
C. It enables disciplinary action to be taken at every level of responsibility.
D. The coordination of activities is facilitated.

5. Compared to budgeting, long-range planning generally has:

A. the same amount of detail.
B. a longer time period.
C. the same emphasis.
D. the same time period.

6. The most common budget period is a

A. week.
B. month.
C. quarter.
D. year.

7. Coordinating the preparation of the budget is the responsibility of the

A. treasurer.
B. president.
C. chief accountant.
D. budget committee.

8. Long-range planning usually encompasses a period of

A. a quarter.
B. a year.
C. at least two years.
D. at least five years.

9. The master budget is a set of interrelated budgets that constitutes a plan of action for a
specified time period.
A. True
B. False
This statement is correct.

10. The budgeted income statement is the starting point in preparing financial budgets.
A. True
B. False
The budgeted income statement is an operating budget, not a financial budget.

11. Which of the following lists includes only financial budgets?

A. Cash budget, production budget, and capital expenditures budget.
B. Capital expenditure budget, sales budget, and budgeted income statement.

C. Budgeted income statement, budgeted balance sheet, and sales budget.

D. Budgeted balance sheet, cash budget, and the capital expenditures budget.

12. A sales budget is

A. derived from the production budget.
B. management's best estimate of sales revenue for the year.
C. not the starting point for the master budget.
D. prepared only for credit sales.

13. The formula for the production budget is budgeted sales in units plus
A. desired ending merchandise inventory less beginning merchandise inventory.
B. beginning finished goods units less desired ending finished goods units.
C. desired ending direct materials units less beginning direct materials units.
D. desired ending finished goods units less beginning finished goods units.

14. Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of
direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds
and the desired ending inventory is 2,200 pounds, the total pounds to be purchased are
A. 9,400.
B. 9,500.
C. 9,700.
D. 10,700.

15. Operating budgets include all of the following except the

A. sales budget.
B. production budget.
C. capital expenditure budget.
D. budgeted income statement.

16. Each of the other budgets in the master budget depends on the
A. budgeted income statement.
B. cash budget.
C. production budget.
D. sales budget.

17. Each of the following budgets is used in preparing the budgeted income statement except
the
A. sales budget.
B. selling and administrative budget.
C. capital expenditure budget.
D. direct labor budget.

18. The budgeted income statement is

A. the end-product of the operating budgets.
B. the end-product of the financial budgets.
C. the starting point of the master budget.
D. dependent on cash receipts and cash disbursements.

19. The important end-product of the operating budgets is the

A. budgeted income statement.
B. cash budget.
C. production budget.
D. budgeted balance sheet.

20. The format of a cash budget is

A. Beginning cash balance + Cash receipts + Cash from financing Cash disbursements
= Ending cash balance.
B. Beginning cash balance + Cash receipts Cash disbursements +/ Financing =
Ending cash balance.
C. Beginning cash balance + Net income- Cash dividends = Ending cash balance.
D. Beginning cash balance + Cash revenues Cash expenses = Ending cash balance.

21. Expected direct materials purchases in Read Company are $70,000 in the first quarter and
$90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred,
and the balance is paid in the following quarter. The budgeted cash payments for purchases
in the second quarter are
A. $96,000.
B. $90,000.
C. $78,000.
D. $72,000.

22. Financial budgets consist of all of the following except the

A. cash budget.
B. capital expenditure budget.
C. budgeted income statement.
D. budgeted balance sheet.

23. The budget that is often considered to be the most important financial budget is the
A. cash budget.
B. capital expenditure budget.
C. budgeted income statement.
D. budgeted balance sheet.

24. The cash budget contains sections for each of the following except
A. financing.
B. cash receipts.
C. cash disbursements.
D. capital expenditures.

25. At the beginning of the year, Opal Company has a cash balance of $23,000. During the year,
the company expects cash disbursements of $160,000, and cash receipts of $140,000. If
Opal Company requires an ending cash balance of $20,000, how much must the company
borrow?
A. $40,000.
B. $17,000.
C. $20,000.
D. $0.

26. A merchandiser uses a merchandise purchases budget in addition to a production budget.

A. True
B. False
A merchandiser uses a merchandise purchases budget instead of a production budget.

27. Which one of the following is an input that is needed in order to budget a service company?
A. Determine estimated billings of clients.
B. Determining expected billing time for each staff member.
C. Determining cash needed for production.
D. Determining expected units to be sold.

28. Which one of the following budgets would not be prepared for a merchandising company?
A. Production budget.
B. Capital expenditures budget.
C. Cash budget.
D. Merchandise purchases budget.

29. The budget for a merchandiser differs from a budget for a manufacturer because
A. a merchandise purchases budget replaces the production budget.
B. the manufacturing budgets are not applicable.
C. neither of these.
D. both of these.

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