Accounting Exam 3: Chapter 8

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

budget

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 coordinate the activities of the entire organization by integrating the plans of its various parts and the budgeting process can uncover potential bottlenecks before they occur force managers to think about and plan for the future

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

True or false: The definition of responsibility accounting states that senior management is directly responsible for every decision made by lower level managers.

false

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

sales price per unit

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

selling and administrative

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget.

selling and administrative

An essential management tool that communicates management's plans throughout the organization, allocates resources and coordinates activities is the

master budget

The amount of goods for resale to be purchased from suppliers during the period is shown on the ____________ budget

merchandise purchases

Using a budget to blame or pressure employees to do a better job leads to:

mistrust

More accurate estimates and higher motivation are generally the result of using a(n) ______ budget.

participative

A budget that keeps managers focused at least one year ahead is a continuous or ____________ budget.

perpetual

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

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

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

a self-imposed budget

Master budget schedules:

answer several key questions for a company are based on estimates and assumptions

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

The ending finished goods inventory budget computes the:

cost of unsold units

Working hours required to satisfy the production budget are 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 to provide for adequate inventories.

direct materials

Using budget assumptions when preparing the master budget:

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 a company's sales, production, and financial goals is contained in the _____ budget.

master

An essential management tool that communicates management's plans throughout the organization, allocates resources, and coordinates activities is called the ______ budget.

master