Chapter 24

Which one of the following budgets would not be prepared for a merchandising company?

Production budget.

Which one of the following is necessary if a company expects its budget to be effective?

The company must have a sound organizational structure.

Long-range planning usually encompasses a period of

at least five years.

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

desired ending direct materials less beginning direct materials.

The most common budget period is a

year.

Which of the following are correct statements about a budget?

All of these options are correct statements.

The format of a cash budget is

Beginning cash balance + Cash receipts - Cash disbursements +/- Financing = Ending cash balance.

Which of the following lists includes only financial budgets?

Budgeted balance sheet, cash budget, and the capital expenditures budget.

In the merchandise purchases budget, required merchandise purchases are computed by adding

Budgeted cost of goods sold + desired ending merchandise inventory - beginning merchandise inventory = required merchandise purchases.

Budgets are used by all of the following except

all of these organizations use budgets.

Coordinating the preparation of the budget is the responsibility of the

budget committee.

Financial budgets consist of all of the following except the

budgeted income statement.

The important end-product of the operating budgets is the

budgeted income statement.

Each of the following budgets is used in preparing the budgeted income statement except the

capital expenditure budget.

Operating budgets include all of the following except the

capital expenditure budget.

The cash budget contains sections for each of the following except

capital expenditures.

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

cash budget.

The budgeted balance sheet is

developed from the budgeted balance sheet for the preceding year and the budgets for the current year.

The direct labor budget and the manufacturing overhead budget are prepared directly from the

production budget.

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

requires only top management to plan ahead and formalize goals.

Each of the other budgets in the master budget depends on the

sales budget.

The essentials of effective budgeting do not include

top-down budgeting.

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the

total required direct labor hours.