ACCY2 Chapter 8

Using budgeting assumptions when preparing the master budget, Blank______.

makes it easier to answer "what-if" questions

All costs of production other than direct materials and direct labor are shown on the ______ budget.

manufacturing overhead

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the ______ budget.

master

An integrated business plan that formally lays out the company's goals is called the ______ budget.

master

A company with adequate cash balances at the beginning and end of the year, ______.

may still have cash deficiency issues during the year

The amount of goods for resale to be acquired from suppliers during the period is shown on the ______ budget.

merchandise purchases

The amount of goods to be acquired from suppliers during the period is shown on the ______ budget.

merchandise purchases

Developing goals and preparing various budgets to achieve those goals is part of ______,

planning

Developing goals and preparing various budgets to achieve those goals is part of the ______ process.

planning

Budgets are used for two distinct purposes: ______ and ______.

planning; control

The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period.

produced

In a manufacturing company, the ______ budget is prepared right after the sales budget.

production

In a manufacturing company, the ______ budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.

production

In a manufacturing company, the budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.

production

The direct labor budget is based directly on the ______ budget.

production

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate.

sales

The first step in the budgeting process is preparing the ______ budget.

sales

To calculate total sales on the sales budget, multiply budgeted sales in units by ______.

sales price per unit

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) ______-______ budget is in place.

self imposed

Recognizing individuals at all levels of the organization as team members whose views and judgments are valued by top management is an advantage of ______.

self-imposed budgeting

Budgeted expenses for areas other than manufacturing are shown on the ______ budget.

selling and administrative

A company can repay outstanding principal and interest when ______.

the cash excess is greater than the minimum required cash balance

Borrowing money is required whenever ______.

there is a cash deficiency the cash excess is less than the minimum required cash balance

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

The ending finished goods inventory budget computes the cost of ______ units.

unsold

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ______ section.

disbursements

The cost of unsold units is computed on the ______ budget.

ending finished goods inventory

The cash budget includes four major sections: receipts, disbursements, the cash excess or deficiency, and ______.

financing

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?

Budgeted income statement

Which of the following is not found in the financing section of the cash budget?

Cash deficiency

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted ______.

income statement

Control involves developing goals and preparing various budgets to achieve those goals.

False

For most companies a single, annual cash budget is sufficient.

False

In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget?

Production

Which of the following is needed to prepare a sales budget?

The budgeted number of units to be sold

Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

Required borrowings on a cash budget is calculated by ______.

adding the desired ending cash balance to the amount of the cash deficiency

The receipts section of the cash budget lists ______.

all cash inflows except borrowings

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the from last year.

balance sheet

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections.

balance sheet

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules.

beginning

A detailed plan for the future that is usually expressed in formal quantitative terms is a(n) ______.

budget

When a manager creates a budget that is too easy to attain, ______ occurs.

budgetary slack

Limitations of self-imposed budgeting include ______.

budgetary slack suboptimal budget recommendations

The receipts, disbursements, excess or deficiency, and financing section are all parts of the ______ budget.

cash

Budgets ______.

communicate management's plan throughout the organization

Gathering feedback to ensure that the plan is being followed is referred to as ______.

control

Budgets ______.

define goals and objectives that can serve as benchmarks for evaluating subsequent performance encourage managers to think about and plan for the future and the budgeting process can uncover potential bottlenecks before they occur coordinate the activities of the entire organization by integrating the plans of its various parts

The number of working hours required to satisfy the production budget is shown on the ______ budget.

direct labor

In a manufacturing company, the ______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories

direct materials