Budgeting: True/False

BUDGETING
TRUE/FALSE
1. Strategic planning is focused on short-term goals of less than five years.
ANS: F DIF: Easy OBJ: 8-2
2. Strategic planning is focused on long-range goals of five to ten years.
ANS: T DIF: Easy OBJ: 8-2
3. The budget is an important source of feedback for an organization.
4. Most tactical plans are single use plans.
5. An annual budget is an example of a strategic plan.
6. An annual budget is an example of a single use tactical plan.
7. Top management should be directly involved in strategic planning for an organization.
8. Operational management should be directly involved with the strategic planning of an organization.
ANS: F DIF: Moderate OBJ: 8-2
9. The financial budget is prepared before the operating budget.
10. The financial budget is prepared after the operating budget.
11. The operating budget is expressed both in units and dollars.
12. The first stage in the budgeting process is the preparation of a sales budget.
13. The first stage in the budgeting process is the preparation of a cash collections budget.
14. In a manufacturing organization, the cash budget is prepared immediately after the sales budget.

15. In a manufacturing organization, the production budget is prepared immediately after the sales budget.
ANS: T DIF: Moderate OBJ: 8-3
16. The amount of raw materials that must be purchased can be computed by the following formula: Beginning inventory
+ Materials required - Ending inventory.
17. The amount of raw materials that must be purchased can be computed by the following formula: Ending inventory +
Materials required - Beginning inventory.
18. In estimating factory overhead, it is necessary to separate costs into their fixed and variable components.
19. In estimating factory overhead, it is necessary to subtract depreciation from total overhead costs.
20. In estimating factory overhead, it is necessary to add depreciation to total overhead costs.
21. The effect of capital expenditures on the master budget is reflected through periodic depreciation charges in the cash
outflow portion.
22. The effect of capital expenditures on the master budget is reflected through cash payments made for acquisition of
capital assets.
23. The cash budget is constructed after all other budgets have been completed.
24. Balances for Accounts Receivable and Sales Discounts are projected before the cash collections schedule is prepared.
25. Balances for Accounts Receivable and Sales Discounts are projected after the cash collections schedule is
prepared.
26. The final step in constructing the master budget is the preparation of pro-forma financial statements for the period.
27. A continuous budget is prepared by adding a new budget month as each month expires.
28. Budgetary slack is an effective motivator for employees, because it reduces employee frustration when goals cannot
be achieved.
29. Budgetary slack is frequently found in imposed budgets.
30. A participatory budget is developed by both top management and operating personnel.
31. A budget manual should include pro-forma financial statements for the upcoming period.
32. A budget manual should include a statement of the budgetary purpose and its desired results..
33. A calendar of scheduled budgetary activities helps to coordinate the budgeting process.
34. Top management can reduce slack by using a bonus system to link performance to the budget.
ANS: T DIF: Moderate OBJ: Easy
COMPLETION
1. Long-range planning carried out by top management is referred to as ______________________________.
ANS: strategic planning
DIF: Easy OBJ: 8-2
2. Short-term planning designed to address a specific set of circumstances is referred to as

_____________________________.
ANS: tactical planning
DIF: 8-2 OBJ: Easy
3. The final document resulting from the budgeting process is referred to as the ______________________.
ANS: master budget
DIF: Easy OBJ: 8-2
4. A budget that is expressed in terms of both units and dollars is referred to a an ________________________.
ANS: operating budget
DIF: Easy OBJ: 8-3
5. A budget that indicates the funds to be generated or consumed during the period is referred to as a
__________________________.
ANS: financial budget
DIF: Easy OBJ: 8-3

6. The starting point for any master budget is the _________________________.
ANS: sales budget
DIF: Easy OBJ: 8-3
7. The ending point in the budgetary process is the _____________________________.
ANS: pro-forma financial statements
DIF: Easy OBJ: 8-4

8. In a manufacturing organization, the budget that is prepared after the sales budget is the
_________________________.
ANS: production budget.
DIF: Easy OBJ: 8-4
9. In a manufacturing organization, the budgets that are prepared after the production are the _____________________,
_____________________,and __________________ budgets.
ANS: direct materials, direct labor, overhead
DIF: Easy OBJ: 8-4
10. The budget that focuses on an organization’s long-term needs is referred to as a __________________________.
ANS: capital budget
DIF: Easy OBJ: 8-4
11. A budget that is prepared by adding a new budget month as each month expires is referred to as a
_________________________________________.
ANS: continuous budget.
DIF: Easy OBJ: 8-6
12. A budget that is developed with little input from operating personnel is referred to as a(n)
_____________________________________.
ANS: imposed budget
DIF: Easy OBJ: 8-6
13. A budget that is developed by both top management and operating personnel is referred to as a(n)
_____________________________________.
ANS: participatory budget
DIF: Easy OBJ: 8-6
14. If revenues are intentionally underestimated during the budgeting process, _____________________ has been created.
ANS: budgetary slack
DIF: Easy OBJ: 8-6

MULTIPLE CHOICE
1. A budget aids in
a. communication.
b. motivation.
c. coordination.
d. all of the above.
ANS: D DIF: Easy OBJ: 8-1
2. Measuring the firm's performance against established objectives is part of which of the following functions?
a. Planning
b. Controlling
c. Organizing
d. Staffing
ANS: B DIF: Easy OBJ: 8-1
3. The preparation of an organization's budget

a. forces management to look ahead and try to see the future of the organization.
b. requires that the entire management team work together to make and carry out the yearly
plan.
c. makes performance review possible at all levels of management.
4. Which of the following is a basic element of effective budgetary control?

a. cost behavior patterns
b. cost-volume-profit analysis
c. standard costing
d. all of the above
ANS: A DIF: Easy OBJ: 8-1
5. When actual performance varies from the budgeted performance, managers will be more likely to revise future
budgets if the variances were
a. controllable rather than uncontrollable.
b. uncontrollable rather than controllable.
c. favorable rather than unfavorable.
d. small.
ANS: B DIF: Moderate OBJ: 8-1
6. External factors that cause the achievement of company goals are the
a. annual budget.
b. industry price and cost structure.
c. talents possessed by its managers.
d. board of directors.
7. A budget is
a. a planning tool.
b. a control tool.
c. a means of communicating goals to the firm's divisions.
8. Ineffective budgets and/or control systems are characterized by the use of

a. budgets as a planning tool only and disregarding them for control purposes.
b. budgets for motivation.
c. budgets for coordination.
d. the budget for communication.
9. Strategic planning is
a. planning activities for promoting products for the future.
b. planning for appropriate assignments of resources.
c. setting standards for the use of important but hard-to-find materials.
d. stating and establishing long-term plans.
10. Key variables that are identified in strategic planning are

a. normally controllable if they are internal.
b. seldom if ever controllable.
c. normally controllable if they occur in a domestic market.
d. normally uncontrollable if they are internal.
11. Tactical planning usually involves which level of management?

a. middle
b. top
c. middle and top
d. operational
ANS: C DIF: Easy OBJ: 8-2
12. Which of the following statements is true?

a. All organizations have the same set of budgets.
b. All organizations are required to budget.
c. Budgets are a quantitative expression of an organization's goals and objectives.
d. Budgets should never be used to evaluate performance.
13. Which of the following is not an "operating" budget?

a. sales budget
b. production budget
c. purchases budget
d. capital budget
14. The master budget is a static budget because it

a. is geared to only one level of production and sales.
b. never changes from one year to the next.
c. covers a preset period of time.
d. always contains the same operating and financial budgets.
15. The master budget is a
a. static budget.
b. flexible budget.
c. qualitative expression of a prior goal.
d. qualitative expression of a future goal.
16. The master budget usually includes

a. an operating budget.
b. a capital budget.
c. pro forma financial statements.
17. Which of the following is usually perceived as being the master budget's greatest advantage to management?
a. performance analysis
b. increased communication
c. increased coordination
d. required planning
18. Chronologically, the first part of the master budget to be prepared would be the
a. sales budget.
b. production budget.
c. cash budget.
d. pro forma financial statements.
19. An example of a recurring short-term plan is

a. a probable product line change.
b. expansion of plant and facilities.
c. a unit sales forecast.
d. a change in marketing strategies.
20. If the chief accountant of a firm has to prepare an operating budget for the coming year, the first budget to be prepared
is the
a. sales budget.
b. cash budget.
c. purchases budget.
d. capital budget.
21. It is least likely that a production budget revision would cause a revision in the
a. capital budget.
b. cash budget.
d. pro forma balance sheet.
22. Budgeted production for a period is equal to

a. the beginning inventory + sales - the ending inventory.
b. the ending inventory + sales - the beginning inventory.
c. the ending inventory + the beginning inventory - sales.
d. sales - the beginning inventory + purchases.
23. Chronologically, in what order are the sales, purchases, and production budgets prepared?
a. sales, purchases, production
b. sales, production, purchases
c. production, sales, purchases
d. purchases, sales, production
24. The material purchases budget tells a manager all of the following except the
a. quantity of material to be purchased each period.
b. quantity of material to be consumed each period.
c. cost of material to be purchased each period.
d. cash payment for material each period.
25. Of the following budgets, which one is least likely to be determined by the dictates of top management?
a. sales
b. material usage
c. revenues
d. general and administrative
26. The amount of raw material purchased in a period may be different than the amount of material used that period
because
a. the number of units sold may be different from the number of units produced.
b. finished goods inventory may fluctuate during the period.
c. the raw material inventory may increase/decrease during the period.
d. companies often pay for material in the period after it is purchased.
ANS: C DIF: Moderate OBJ: 8-4
27. A purchases budget is

a. not affected by the firm's policy of granting credit to customers.
b. the same thing as a production budget.
c. needed only if a firm does not pay for its merchandise in the same period as it is
purchased.
d. affected by a firm's inventory policy only if the firm purchases on credit.
28. Which of the following equations can be used to budget purchases?
(BI = beginning inventory, EI = ending inventory desired, CGS = budgeted cost of goods sold, P = budgeted
purchases)
a. P = CGS + BI - EI
b. P = CGS + BI
c. P = CGS + EI + BI
d. P = CGS + EI - BI
29. Both the budgeted quantity of material to be purchased and the budgeted quantity of material to be consumed can be
found in the
a. material purchases budget.
b. production budget.
c. pro forma income statement.
d. cash budget.
30. A company that maintains a raw material inventory, which is based on the following month's production needs, will
purchase less material than it uses in a month where
a. sales exceed production.
b. production exceeds sales.
c. planned production exceeds the next month's planned production.
d. planned production is less than the next month's planned production.
ANS: C DIF: Moderate OBJ: 8-4
31. If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the next month's
budgeted sales, budgeted production for January will exceed budgeted sales for January when budgeted
a. February sales exceed budgeted January sales.
b. January sales exceed budgeted December sales.
c. January sales exceed budgeted February sales.
d. December sales exceed budgeted January sales.
ANS: A DIF: Moderate OBJ: 8-4
32. Depreciation on the production equipment would appear in which of the following budgets?
a. cash budget
b. production budget
c. selling and administrative expense budget
d. manufacturing overhead budget
33. The selling, general, and administrative expense budget is based on the _______________ budget.
a. production
b. sales
c. cash
d. purchases
34. The budgeted amount of selling and administrative expense for a period can be found in the
a. sales budget.
b. cash budget.
c. pro forma income statement.
d. pro forma balance sheet.
35. Which of the following represents a proper sequencing in which the budgets below are prepared?
a. Direct Material Purchases, Cash, Sales
b. Production, Sales, Income Statement
c. Sales, Balance Sheet, Direct Labor
d. Sales, Production, Manufacturing Overhead
36. The detailed plan for the acquisition and replacement of major portions of property, plant, and equipment is known as
the
a. capital budget.
b. purchases budget.
c. commitments budget.
d. treasury budget.
37. The budgeted payment for labor cost each period would be found in the
a. labor budget.
b. pro forma income statement.
c. selling, general, and administrative expense budget.
d. cash budget.
38. The cash budget ignores all

a. dividend payments.
b. sales of capital assets.
c. noncash accounting accruals.
d. sales of common stock.
39. Which of the following items would not be found in the financing section of the cash budget?
a. cash payments for debt retirement
b. cash payments for interest
c. dividend payments
d. payment of accounts payable
40. The primary reason that managers impose a minimum cash balance in the cash budget is
a. because management needs discretionary cash for unforeseen business opportunities.
b. managers lack discipline to control their spending.
c. that it protects the organization from the uncertainty of the budgeting process.
d. that it makes the financial statements look more appealing to creditors.
41. Chronologically, the last part of the master budget to be prepared would be the
a. pro forma financial statements.
b. cash budget.
c. capital budget
d. production budget.
42. The pro forma income statement is not a component of the

a. master budget.
b. financial budgets.
c. operating budgets.
d. capital budget.
43. A pro forma financial statement is

a. a financial statement for past periods.
b. a projected or budgeted financial statement.
c. presented for the form but contains no dollar amounts.
d. a statement of planned production.
44. A master budget contains which of the following?
Sales Production Pro forma statements
a. yes yes yes

b. no no yes
c. no no no
d. yes no yes
45. The budgeted cost of products to be sold in a future period would be found in the
a. production budget.
b. sales budget.
d. pro forma income statement.
46. A budget that includes a 12-month planning period at all times is called a ____________ budget.
a. pro forma
b. flexible
c. master
d. continuous
47. The method of budgeting that adds one month's budget to the end of the plan when the current month's budget is
dropped from the plan is called ____________ budgeting.
a. long-term
b. operations
c. incremental
d. continuous
48. Slack in operating budgets

a. results from unintentional managerial acts.
b. makes an organization more efficient and effective.
c. requires managers to work harder to achieve the budget.
d. is greater when managers are allowed to participate in the budgeting process.
49. Budget slack is a condition in which

a. demand is low at various times of the year.
b. excess machine capacity exists in some areas of the plant.
c. there is an intentional overestimate of expenses or an underestimate of revenues.
d. managers grant favored employees extra time off.
1. Which of the following objectives is not a primary purpose of preparing a budget?

a. To provide a basis for comparison of actual performance
b. To communicate the company’s plans throughout the entire business organization
c. To control income and expenditure in a given period.
d. To make sure the company expands its operations.
2. Budget slack is a condition in which

a. demand is low at various times of the year.
b. excess machine capacity exists in some areas of the plant.
c. there is an intentional overestimate of expenses or an underestimate of revenues.
d. managers grant favored employees extra time off.
3. Ineffective budgets and/or control systems are characterized by the use of

a. budgets as a planning tool only and disregarding them for control purposes.
b. budgets for motivation.
c. budgets for coordination.
d. the budget for communication.
4. For better management acceptance, the flow of data to be used for budgeting should begin with
a. Accounting department c. Lower levels of management
b. Top management d. Budget committee
5. These statements are proper to the budgeting process except:

a. It is a part of management’s responsibility to plan the use of its resources.
b. It is a tool to orchestrate the various functions of operations in a business.
c. The involvement of the various levels of individuals in the company is necessary to gain its
acceptance and attain its goals.
d. Actual results need not be compared with plan, since the process ends after budget is approved.
6. In budgeting, which of the following statements is false?

a. Budgeting provides a measuring device to which subsequent performances are compared and
evaluated.
b. Planning and control are the essential features of the budgeting process
c. Budget preparation is not the sole responsibility of any one department and is prepared by combining
the efforts of many individuals
d. Capital expenditures budget shows the availability of idle cash for investment
7. Activity-based budgeting includes all the following steps EXCEPT

a. determining demands for activities from sales and production targets.
b. computing the cost of performing activities.
c. determining a separate cost-driver rate for each department.
d. describing the budget as costs of activities rather than costs of functions.
8. Just-in-time manufacturers are more likely than conventional manufacturers to

a. Prepare production budgets without a sales forecast.
b. Budget materials purchases equal to the current month’s needs for production.
c. Budget unit production for the month at greater than budgeted unit sales for the month.
d. Experience cash shortages.
9. On budgeting, all of the following are not valid, except
a. Responsibility budget identifies revenue and costs with the individual responsible for their
incurrence.
b. The best way to establish budget figures is to use last year’s actual cost and activity data as this
year’s budget estimates.
c. A sales budget and a sales forecast are the same thing.
d. The primary purpose of the cash budget is to show the expected cash balance at the end of the budget
period.
10. Which of the following statements is True?

a. Under zero-based budgeting, a manager is required to start at zero budget levels each period, as if the
programs involved were being initiated for the first time.
b. The primary purpose of the cash budget is to show the expected cash balance at the end of the budget
period.
c. Budget data are generally prepared by top management and distributed downward in an organization.
d. The budget committee is responsible for preparing detailed budget figures in an organization.
11. A budget that includes a 12-month planning period at all times is called a __________ budget.
a. pro forma b. flexible c. master d. continuous
12. Budgeting expenditures by purpose is called

a. Program budgeting. c. Line budgeting.
b. Zero-based budgeting. d. Flexible budgeting.
13. A systematized approach known as zero-based budgeting (ZBB)

a. Presents planned activities for a period of time but does not present a firm commitment.
b. Divides the activities of individual responsibility centers into a series of packages that are prioritized.
c. Classifies the budget by the prior year’s activity and estimates the benefits arising from each activity.
d. Commences with the current level of spending.
14. The procedure for setting profit objectives in which management specifies a given rate of return that it
seeks to realize in the long run by means of planning toward that end is the:
A. a priori method D. theoretical method
B. ad hoc method E. a posteriori method
C. pragmatic method
15. This budgeting system places the burden of proof on the manager to justify authority to spend any
money whether or not there was spending in the previous period. Different ways of performing the same
activity and different levels of effort for the activity is evaluated. This system is called
a. Scenario budgeting. c. Budgeting by alternatives.
b. Zero-based budgeting. d. Budgeting by responsibility and authority.
16. In zero-based budgeting, which of the following statements are True?

1. All activities in the company are organized into break-up units called packages.
2. All costs have to be justified every budgeting period.
3. The process is not time consuming since justification of costs can be done as a routine matter.
a. All three statements. c. Statement 1 only.
b. Statements 1 and 2 only. d. Statement 2 and 3 only.
17. A budget that is expressed in units of materials, number of employees, or number of man-hours or
service units rather than in pesos is known as
a. Planning budget b. Progressive budget c. Physical budget d. Traditional budget
18. Which of these statements are advantages of profit planning?
1. Develops profit-mindedness, encourages cost consciousness and resources utilization throughout the
company.
2. Provides vehicle to communicate objectives, gain support for the plan, of what is expected, thereby
developing a sense of commitment to achieve established goals.
3. Provides yardstick to evaluate actual performance; encouraging efficiency, increasing output and
reducing cost.
4. Provides a sense of direction for the company and enhances coordination of business activity.
5. Eliminates or takes over the role of administration by providing detailed information that allows
executives to operate toward achievement of the organization’s objectives.
a. Statements 3, 4, and 5 only. c. Statements 1, 3, and 4 only.
b. All five statements. d. Statements 1, 2, 3, and 4 only.
19. For a company that does not have resource limitations in what sequence would the budgets be prepared?
1. cash budget 4. production budgets
2. sales budget 5. purchase budgets
3. inventory budgets
a. sequence 2, 3, 4, 5 and 1 c. sequence 2, 4, 3, 5 and 1
b. sequence 2, 3, 4,1 and 5 d. sequence 4, 3, 2, 1 and 5
20. A budget that identifies revenues and costs with an individual controlling their incurrence is
a. Master budget c. Responsibility budget
b. Product budget d. None of the above
21. If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the
next month's budgeted sales, budgeted production for January will exceed budgeted sales for January
when budgeted
a. February sales exceed budgeted January sales.
b. January sales exceed budgeted December sales.
c. January sales exceed budgeted February sales.
d. December sales exceed budgeted January sales.
22. A company that maintains a raw material inventory, which is based on the following month's production
needs, will purchase less material than it uses in a month where
a. sales exceed production.
b. production exceeds sales.
c. planned production exceeds the next month's planned production.
d. planned production is less than the next month's planned production.
23. A company has prepared a cash budget for January through June of 20x3. Which of the following,
discovered in February 20x3, is LEAST likely to require revising the cash budget?
a. February sales are lower than budgeted.
b. The interest rate on short-term borrowing is higher than budgeted.
c. The company increased from 10% to 20% the down payment it requires from customers.
d. The company changed inventory methods from LIFO to FIFO.
24. Which of the following is not a functional budget?

a. Research and development budget c. Cash budget
b. Purchasing budget d. Direct labor cost
25. By the end of this year you expect to have a cash balance of P500,000. Which of these
transactions/indicators (not considered in your estimate) will reduce this balance?
a. A modification on credit terms to customers will reduce credit sales.
b. A dialogue with key suppliers will allow discounts on extended payment terms.
c. A new machine will be bought with proceeds from a bank loan that will carry a 17% interest per
annum and monthly payments over 2 years.
d. The ratio of current trade receivables to total receivables will decrease.
26. Information not shown in the cash budget but needed in the preparation of the statement of operations
for the period
a. Sales b. Dividends c. Inventory levels d. Tax Payments
27. Which of the following is LEAST likely to be affected if unit sales for this month are lower than
budgeted?
a. Production for this month. c. Cash receipts for next month.
b. Production for next month. d. Inventory at the end of this month.
28. The cash budget for 20x2 would be affected in some way by all of the following EXCEPT
a. A cash dividend declared in 20x1 for payment in 20x2.
b. A cash dividend declared in 20x2 for payment in 20x3.
c. Interest expense on loans taken out and repaid during 20x2.
d. The sales forecast for the first month in 20x3.
29. Net cash inflow is given too much emphasis by managers today, for they know that cash is the common
cause of business failures. Net cash inflow is equal to
a. Cash balance at the beginning + cash receipts – cash disbursements
b. Cash balance at the end of last month + cash from all sources of revenue – revenue payments
c. Cash received during the period minus cash disbursements during the period
d. Cash sales and collections of accounts receivable minus revenue and capital expenditures
30. A financing gap occurs when

a. Required assets exceed available equities.
b. The budgeted cash balance goes below the minimum required balance.
c. Budgeted cash receipts are less than budgeted cash disbursements.
d. Any of the above occurs.
31. Which of the following statements about budgeted financial statements is incorrect?
a. Cost of goods sold is determined by multiplying the budgeted unit sales by the budgeted total unit
production cost.
b. The budgeted income statement is developed from the budgeted for the current year.
c. The budgeted balance sheet is developed entirely from the budgets for the current year.
d. Once established, the budgeted income statement provides the basis for evaluating company
performance.
32. Which of the following is most likely to result if X’s managers decide to reduce inventory to alleviate a
cash deficiency shown in its initial cash budget?
a. A decrease in X’s cost-of-sales percentage.
b. A decrease in X’s budgeted purchases.
c. A lowering of X’s credit rating.
d. A longer collection period for X’s credit sales.
33. If cash receipts from customers are greater than sales, which of the following is most likely to be true?
a. Accounts receivable will decrease. c. Cash balance will increase.
b. Outstanding debt will decrease. d. The company will show a profit.
34. Considering budgeting concepts and principles, which of the following statements is not applicable?
a. The only difference between a flexible budget and a static budget is that a flexible budget does not
contain fixed costs.
b. A flexible budget is geared toward a range of activity rather than toward a single level of activity.
c. Although it is effective in measuring production control, a static budget is not effective in measuring
cost control.
d. The flexible budget is often used as a basis for preparing the pre-determined overhead rate.
Theory
1. D 16. B 31. C
2. C 17. C 32. B
3. A 18. D 33. A
4. C 19. A 34. A
5. D 20. C
6. D 21. A
7. C 22. C
8. B 23. D
9. A 24. C
10. A 25. C
11. D 26. C
12. A 27. A
13. B 28. B
14. A 29. C
15. B 30. A

Budgeting: True/False

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BUDGETING

1. Strategic planning is focused on short-term goals of less than five years.

ANS: F DIF: Easy OBJ: 8-2

2. Strategic planning is focused on long-range goals of five to ten years.

ANS: T DIF: Easy OBJ: 8-2

3. The budget is an important source of feedback for an organization.

ANS: T DIF: Easy OBJ: 8-1

4. Most tactical plans are single use plans.

ANS: T DIF: Easy OBJ: 8-2

5. An annual budget is an example of a strategic plan.

ANS: F DIF: Easy OBJ: 8-2

6. An annual budget is an example of a single use tactical plan.

ANS: T DIF: Easy OBJ: 8-2

7. Top management should be directly involved in strategic planning for an organization.

ANS: T DIF: Easy OBJ: 8-2

ANS: F DIF: Moderate OBJ: 8-2

9. The financial budget is prepared before the operating budget.

ANS: F DIF: Easy OBJ: 8-3

10. The financial budget is prepared after the operating budget.

ANS: T DIF: Easy OBJ: 8-3

11. The operating budget is expressed both in units and dollars.

ANS: T DIF: Easy OBJ: 8-3

ANS: T DIF: Easy OBJ: 8-3

ANS: F DIF: Easy OBJ: 8-3

ANS: F DIF: Moderate OBJ: 8-3

ANS: T DIF: Moderate OBJ: 8-3

ANS: F DIF: Moderate OBJ: 8-4

ANS: T DIF: Moderate OBJ: 8-4

ANS: T DIF: Easy OBJ: 8-4

ANS: T DIF: Easy OBJ: 8-4

ANS: F DIF: Easy OBJ: 8-4

ANS: F DIF: Moderate OBJ: 8-4

ANS: T DIF: Moderate OBJ: 8-4

ANS: T DIF: Easy OBJ: 8-5

ANS: F DIF: Moderate OBJ: 8-5

ANS: F DIF: Moderate OBJ: 8-5

ANS: T DIF: Easy OBJ: 8-5

ANS: T DIF: Easy OBJ: 8-6

29. Budgetary slack is frequently found in imposed budgets.

ANS: F DIF: Moderate OBJ: 8-6

ANS: T DIF: Easy OBJ: 8-6

ANS: F DIF: Moderate OBJ: 8-7

ANS: T DIF: Moderate OBJ: 8-7

ANS: T DIF: Easy OBJ: 8-7

ANS: T DIF: Moderate OBJ: Easy

1. Long-range planning carried out by top management is referred to as ______________________________.

ANS: strategic planning

DIF: Easy OBJ: 8-2

2. Short-term planning designed to address a specific set of circumstances is referred to as

ANS: tactical planning

DIF: 8-2 OBJ: Easy

ANS: master budget

DIF: Easy OBJ: 8-2

ANS: operating budget

DIF: Easy OBJ: 8-3

ANS: financial budget

DIF: Easy OBJ: 8-3

ANS: sales budget

DIF: Easy OBJ: 8-3

7. The ending point in the budgetary process is the _____________________________.

ANS: pro-forma financial statements

DIF: Easy OBJ: 8-4

ANS: production budget.