chapter 8 managerial accounting

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

budgetary slack

Most companies rely solely on self-imposed budgeting when creating budgets.

false

The amounts under the Year column in the cash budget always equal the sum of the amounts for the months or quarters of the budget.

false

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 -encourage managers to think about and plan for the future

Madison Corporation's expected beginning cash balance is $22,000. Cash collections are budgeted at $60,000 and cash disbursements are estimated to be $75,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $5,000. Required borrowings for the period equal $

15,000

A company borrows money as needed on the first day of the month and repays principal and interest on the last day of the budget period, if cash is available. For the third quarter of the year, they borrowed $5,000 in July, $7,000 in August and $4,000 in June. The interest rate is 1% per month. Assuming enough money is available on June 30th to repay the debt, the total amount of interest due is

330

A company borrows money as needed on the first day of the month and repays principal and interest on the last day of the budget period, if cash is available. For the second quarter of the year, they borrowed $10,000 in April, $8,000 in May and $5,000 in June. The interest rate is 1% per month. Assuming enough money is available on June 30th to repay the debt, the total amount of interest due is Blank______.

Reason: $10,000 × 3% + $8,000 × 2% + $10,000 × 1% = $560 =560

With a top-down approach to budgeting, lower-level managers ______.

may feel demoralized and resentful

A 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed is called a(n)________ or continuous budget.

perpetual

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

planning


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