BUDGETARY PLANNING T/F
True
A benefit of budgeting is that it provides definite objectives for evaluating performance.
False
A budget can be a means of communicating a company's objectives to external parties
True
A budget can be used as a basis for evaluating performance.
True
A budget can facilitate the coordination of activities among the segments of a large company.
False
A critical factor in budgeting for a service firm is to determine the amount of products to purchase.
False
A manufacturing overhead budget is not needed if the company develops a predeter-mined overhead rate to apply overhead.
True
A merchandiser has a merchandise purchases budget rather than a production budget.
False
A production budget should be prepared before the sales budget.
False
A well-developed budget can operate and enforce itself.
True
The budget committee has the responsibility for coordinating the preparation of the budget.
True
The budget is developed within the framework of a sales forecast.
False
The budget itself and the administration of the budget are entirely accounting responsibilities.
False
The budget itself and the administration of the budget are the responsibility of the accounting department.
False
The budgeted balance sheet is prepared entirely from the budgets for the current year.
True
The budgeted income statement indicates the expected profitability of operations for the next year.
True
The direct materials budget contains both quantity and cost data.
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 units.
False
The direct materials budget must be completed before the production budget because the quantity of materials available for production must be known.
False
The flow of input data for budgeting should be from the highest levels of responsibility to the lowest.
False
The longer the budget period, the more reliable the estimates of future outcomes.
False
The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs.
True
The manufacturing overhead budget shows the expected manufacturing overhead costs
True
The master budget consists of operating and financial budgets.
False
The master budget reflects management's long-term plans encompassing five years or more.
True
The number of direct labor hours needed for production is obtained from the production budget.
True
The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.
False
Financial budgets must be completed before the operating budgets can be prepared
True
Financial planning models and statistical and mathematical techniques may be used in forecasting sales.
False
If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.
True
In order to develop a budgeted balance sheet, the previous year's balance sheet is needed.
False
In service enterprises, the critical factor in budgeting is coordinating materials and equipment with anticipated services.
True
Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of specific results to be achieved.
False
Budgeting and long-range planning are two terms that describe the same process.
True
Budgets are statements of management's plans stated in financial terms.
True
Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.
True
Effective budgeting requires clearly defined lines of authority and responsibility.