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. |
ACCT 472.21 Ch 23
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