ACCT 472.21 Ch 23

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An unrealistic budget is more likely to result when it

has been developed in a top down fashion.

In many companies, responsibility for coordinating the preparation of the budget is assigned to

a budget committee.

Which of the following statements about budget acceptance in an organization is true?

Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

Which of the following is not a proper match-up?

Budgeting ¨ Long-term goals

Budget development for the coming year usually starts

several months before the end of the current year.

Which one of the following items would never appear on a cash budget?

Depreciation expense

Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable?

Department managers should only be held accountable for controllable variances for their departments.

An overly optimistic sales budget may result in

excessive inventories.

The cash budget reflects

expected cash receipts and cash disbursements from all sources.

The budget committee would not normally include the

external auditor.

Which of the following statements about a budgeted income statement is not true?

The budgeted income statement is prepared after the financial budgets are prepared.

A purchases budget is used instead of a production budget by

merchandising companies.

A master budget consists of

interrelated financial budgets and operating budgets.

Which one of the following is not needed in preparing a production budget?

Budgeted raw materials

Which of the following is done to improve the reliability of the sales forecast?

Employ financial planning models

A common starting point in the budgeting process is

past performance.

The direct materials and direct labor budgets provide information for preparing the

cash budget.

Long-range planning usually encompasses a period of at least

5 years.

Which of the following does not appear as a separate section on the cash budget?

Capital expenditures

Which of the following statements is incorrect?

The production budget is derived from the direct materials and direct labor budgets.

Which of the following is not a financial budget?

Manufacturing overhead budget

The financial budgets include the

cash budget and the budgeted balance sheet.

It is important that budgets be accepted by

All of these.

Of the following items, which one is not obtained from an individual operating budget?

Accounts receivable

Which of the following items does not follow from the adoption of a budget?

Guarantee of accomplishing the profit objective

A critical factor in budgeting for a service firm is to

coordinate professional staff needs with anticipated services.

Which of the following would not appear as a fixed expense on a selling and administrative expense budget?

Freight-out

For a merchandiser, the starting point in the development of the master budget is the

sales budget.

Which one of the following is a problem resulting from a service company being overstaffed?

cash budget and the budgeted balance sheet.

The important end-product of the operating budgets is the

budgeted income statement.

If budgets are to be effective, there must be

an organizational structure with clearly defined lines of authority and responsibility.

Instead of a production budget, a merchandiser will prepare a

merchandise purchases budget.

A sales forecast

shows forecasts for the industry and for the firm.

Hyde Corp.’s cash budget showed total available cash less cash disbursements. What does this amount equal?

The excess of available cash over cash disbursements

Beginning cash balance plus total receipts

equals total available cash.

A budget

is an aid to management.

Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entities will prepare?

Orange Co. will prepare a production budget, and Pineapple Company will prepare a merchandise purchases budget.

The total direct labor hours required in preparing a direct labor budget are calculated using the

production budget.

Long-range planning

generally encompasses a longer period of time than an annual budget.

Which one of the following sections would not appear on a cash budget?

Investing

The formula for determining budgeted merchandise purchases is budgeted

cost of goods sold + desired ending inventory – beginning inventory.

Budgeting is usually most closely associated with which management function?

Planning

A budget is most likely to be effective if

it has top management support.

The primary benefits of budgeting include all of the following except it

requires only top management to plan ahead and formalize their future goals.

The cash budget reflects

expected cash receipts and cash disbursements from all sources.

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