chapter 8

Borrowing money is required whenever:

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

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

The budgeted number of units to be sold.

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

budget

On the cash budget, what is subtracted from total cashavailable to find the cash excess or deficiency?

cash disbursements

T/F: Control involves developing goals and preparing various budgets to achieve those goals.

false

T/F: For most companies a single, annual cash budget is sufficient.

false

T/F: The definintion of responsibility accounting states that senior management is directly responsible for every decision made by lower level managers.

false

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

income statement

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, annd financial goals is contianed in the _______ budget.

master

A number of separate, but independent, budgets that formally lay out the company's slaes, production, and financial goals are 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

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 purchased frrom suppliers during the period is shown on the _________ _________ budget.

merchandise purchases

The amount of goods 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

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

selling and administrative

A company can consider making investments or repay outstanding principal and interest when:

the cash excess is greater than the minimum required cash balance

Budgets:

- 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 - define goals and objectives that can serve as benchmarks for evaluating subsequent performance - force managers to think abouut an d plan for the future

Master budget schedules:

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

The purpose of a budget should be to:

- measure operating results - isolate areas needing attention - establish goals

Which of the following budgets are directly based on information from the sales budget?

- production budget - selling & administrative expense budget

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

a self-imposed budget

Required borrowings on a cash budget is calculated by:

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

The annual master budget file includes the _______ from last year because it is needed for 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 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed is called a(n) _______ or perpetual budget.

continuous

Getting feedback to ensure that the plan is being followed is referred to as:

control

The ending finished goods inventory budget computes the:

cost of unsold units

The ending finsihed goos inventory bduget computes the:

cost of unsold units

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

direct labor

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

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

disbursement

Payments for direct materials, direct labor, and manufacturing overhead costs are all listed in the ________ section of the cash budget.

disbursements

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

ending finished goods inventory

In a manufacturing company, the _______ budget is used to determine the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget.

production

Under the concept of ________ ________, managers should only be held accountable for items they can actually control.

responsibility accounting

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

sales

Both the production and selling and administrative expense budgets are prepared using information directly from the ____ budget.

sales

The first step in the budgeting process is the preparation of the ________ budget.

sales

What is usually the major source of receipts in the receipts of the cash 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

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

selling & administrative