Acc. 2 Chapter 20

A department store has budged sales of 12000 men's suits in September. Management wants to have 6000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4000 suits. What is the dollar amount of purchase of suits? Each suit has a cost of $75. A. $750000 B. $900000 C. $1050000 D. $1200000 E. $1350000

C. $1050000

A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expense to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a: A. Master budget B. Cash budget C. Capital expenditures budget D. Rolling Budget E. Production budget

A. Master budget

The Palos Company expects sales for June, July, and August of $48000, $54000, and $44000, respectively. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 50% of its credit sales in the month following sale, 45% in the second month following sale, and 5% are not collected. What are the company's expected cash receipts for August from its current and past sales? A. $29160 B. $46760 C. $61160 D. $66200 E. $78800

B. $46760

A June sales forecast projects that 6000 units are going to be sold at a price of $10.50 per unit. The desired ending inventory of units is 15% higher than the beginning inventory of 1000 units. Merchandise purchases for June are projected to include how many units? A. 6000 units B. 6150 units C. 5850 units D. 7150 units E. 6500 units

B. 6150 units

Which of the following is a financial budget? A. sales budget B. budgeted balance sheet C. Production budget D. Capital expenditure budget E. Merchandise purchasing budget

B. Budgeted balance sheet

Which of the following budgets is not an operating (income statement) budget? A. sales budget B. cash budget C. General and administrative expense budget D. Selling expenses budget E. Merchandise purchases

B. Cash budget

The most useful budget figures are developed: A. From the top down B. From the bottom up following a participatory process C. Solely by the budget committee D. By the CEO E. After the accounting period has begun

B. From the bottom up following a participatory process

Northern Company is preparing a cash budget for June. The company has $12000 cash at the beginning of June and anticipates $30000 in cash receipts and $34500 in cash disbursements during June. Northern Company has an agreement with its bank to maintain a cash balance of at least $10000. As of May 31, the company owes $15000 to the bank. To maintain $10000 required balance, during June the company must: A. borrow $4500 B. borrow $2500 C. borrow $10000 D. repay $7500 E. repay $2500

B. borrow $2500

The usual starting point for preparing a master budget is forecasting or estimating: A. expenditures B. budgeted balance sheet C. production budget D. capital expenditure budget E. merchandise purchasing budget

B. budgeted balance sheet

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a: A. cash budget B. capital expenditures budget C. rolling budget D. sales budget E. production budget

B. capital expenditures budget

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a: A. Selling expenses budget B. Merchandise purchases budget C. sales budget D. cash budget E. capital expenditures budget

B. merchandise purchases budget

In performing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from: A. the purchase budget B. the sales budget C. the capital expenditures budget D. the budgeted income statement E. the selling expenses budget

B. the sales budget

When preparing the cash budget, all the following should be considered except: A. cash receipts from customers B. cash payments for merchandise C. depreciation expense D. cash payments for income taxes E. cash payments for capital expenditures

C. Depreciation expense

Next year's sales forecast shows that 20000 units of Product A and 22000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2000 units. The beginning inventory of Product B is 2500 units. The desired ending inventory of B is 3000 units. Total budgeted sales of both products for the year would be: A. $42000 B. $200000 C. $264000 D. $464000 E. $500000

D. $464000

Harold's expects its September sales to be 20% higher than its August sales of $150000. Purchases were $100000 in August and are expected to be $120000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Merchandise purchases are paid as follows: 25% in the month of purchase and 75% in the following month. The beginning cash balance on September 1 is $7500. The ending cash balance on September 30 would be: A. $31500 B. 67500 C. $54000 D. $61500 E. $136500

D. $61500

Which of the following is not a benefit of following a well-designed budgeting process? A. Improved decision-making processes B. Improved performance evaluations C. Improved coordination of business activities D. Assurance of future profits E. Improved commitment to meet expected performance by those affected

D. Assurance of future profits

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n): A. capital expenditure budget B. operating budget C. rolling budget D. cash budget E. income statement

D. cash budget

The master budget process usually ends with: A. the production budget B. the sales budget C. the selling expense budget D. the budgeted balance sheet E. the overhead budget

D. the budgeted balance sheet

A quantity of merchandise or materials over the minimum needed reduce the risk of running short is called: A. Just-in-time inventory B. Budgeted stock C. Continuous inventory D. Capital stock E. safety stock

E. Safety stock

Which budget must be completed after a cash budget is prepared? A. capital expenditures budget B. sales budget C. merchandise purchases budget D. general and administrative expense budget E. budgeted income statement

E. budgeted income statement

A plan showing the units of goods to be sold and the revenue to be derived from sales, that is the usual starting point in the budgeting process, is called the: A. operating budget B. business plan C. income statement budget D. merchandise purchases budget E. sales budget

E. sales budget