ACCT 2101 chapter 9

Company A will prepare a production budget, and Company B will prepare a merchandise purchases budget

Company A is a manufacturer and Company B is a merchandiser. what is the difference in the budgets the two entities will prepare?

the excess of available cash over cash disbursements

Macoo Company's cash budget showed total available cash less cash disbursements. what does this amount equal?

it has top management support

a budget is most likely to be effective if:

long enough to provide an obtainable goal under normal business conditions

a budget period should be:

is an aid to management

a budget:

past performance

a common starting point in the budgeting process is:

coordinate professional staff needs with anticipated services

a critical factor in budgeting for a service firm is to:

interrelated financial budgets and operating budgets

a master budget consists of:

merchandising companies

a purchases budget is used instead of a production budget by:

shows forecasts for the industry and for the firm

a sales forecast:

expressing the budget in financial terms

accounting generally has the responsibility for:

credit hours taught by a department

an appropriate activity index for a college or university for budgeting faculty positions would be the:

excessive inventiroes

an overly optimistic sales budget may result in:

has been developed in a top down fashion

an unrealistic budget is more likely to result when it:

equals total available cash

beginning cash balance plus total receipts:

several months before the end of the current year

budget development for the coming year usually starts:

usually starts with budgeting expenditures, rather tahn receipts

budgeting in not-for-profit organizations:

planning

budgeting is usually most closely associated with which management function?

budget committee

coordinating the preparation of the budget is the responsibility of the:

sales budget

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

lower levels of management

for better management acceptance, the flow of input data for budgeting should begin with the:

a full year ahead

if a company has adopted continuous budgeting, the budget will show plans for:

stockholders' approval of the budget

if budgets are to be effective, all of the following must be present except:

an organizational structure with clearly defined lines of authority and responsibility

if the budges are the be effective, there must be:

desired ending finished goods units minus beginning finished goods units

in a production budget, total required units are the budgeted sales units plus:

a budget committee

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

desired ending direct materials less beginning direct materials

in the direct materials budget, the quantity of direct materials to be purchased is computed by adding direct materials required for production to:

merchandise purchases budget

instead of a production budget, a merchandiser will prepare a:

all of these

it is important that budgets be accepted by:

5 years

long-range planning usually encompasses a period of at least:

generally encompasses a longer period of time than an annual budget

long-range planning:

accounts receivable

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

budget director

the budget committee in a company is often headed by the:

external auditor

the budget committee would not normally include the:

cash budget

the budget that is often considered to be the most important financial budget is the:

budgeted income statement

the culmination of preparing operating budgets is the:

cash budget

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

both 1 and 2

the direct materials budget details 1. the quantity of direct materials to be purchased 2. the cost of direct materials to be purchased

true

the direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials. true or false

top-down budgeting

the essentials of effective budgeting do not include:

cash budget and the budgeted balance sheet

the financial budgets include the:

management's minimum required balance

the financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than:

cost of goods sold + desired ending inventory - beginning inventory

the formula for determining budgeted merchandise purchases is budgeted:

budgeted income statement

the important end-product of the operating budget is the:

includes a service revenue budget based on expected client billings

the master budget for a service enterprise:

one year

the most common budget period is:

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

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

budgeted balance sheet

the projection of financial position at the end of the budget period is found on the:

accounting department

the responsibility for expressing management's budgeting goals in financial terms is performed by the:

cash budget

the single most important output in preparing financial budgets is the:

sales budget

the starting point in preparing a master budget is the preparation of the:

production budget

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

department managers should only be held accountable for controllable variances for their departments

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?

2,3,4,1

what is the proper preparation sequencing of the following budgets? 1. budgeted balance sheet 2. sales budget 3. selling and administrative budget 4. budgeted income statement

preparing the budgeted balance sheet

which is the last step in developing the master budget?

they are used in performance evaluation

which is true of budgets?

direct labor budget

which of the following budgets would be prepared for a manufacturer but not for a merchandiser?

capital expenditures

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

indirect labor

which of the following expenses would not appear on a selling and administrative expense budget?

employ financial planning models

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

manufacturing overhead budget

which of the following is not a financial budget?

budgeting <--> Long-term goals

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

cash budget

which of the following is not an operating budget?

guarantee of accomplishing the profit objective

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

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

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

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

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

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

which of the following statements is incorrect?

freight-out

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

staff turnover may increase

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

it provides assurance that the company will achieve its objectives

which one of the following is not a benefit of budgeting?

budgeted raw materials

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

depreciation expense

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

investing

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

they help communicate goals and provide a basis for evaluation

why are budgets useful in the planning process?