Acc 2203 Chapter 8 Smartbook

Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after sale. Calculate expected cash collections for the month of April.

84000

Highly achievable budget targets _____

are used in most companies may generate greater management commitment to the budget may help build manager confidence

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections.

balance sheet

Budgets _____

communicate management's plan throughout the organization

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) _______- _______ budget, or a participative budget, is in place.

self; imposed

The first step in the budgeting process is the preparation of the ____ budget

sales

The budgeted income statement relies on information from the ______.

sales budget selling and administrative expense budget cash budget ending finished goods inventory budget

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

selling and administrative

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

selling and administrative

Variable selling and administrative expenses are calculated by multiplying the budgeted units ______ by the variable selling and administrative expense per unit.

sold

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?

Budgeted income statement

The final schedule of the master budget is the ____

budgeted balance sheet

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

sales

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

budgetary slack

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______

create the budget with a budgeting assumption tab

If a budget initiated by top management has targets that are set too high,

motivation will suffer

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

planning

When profit targets are set by top managers,

goals may be unrealistically high too much slack may be allowed

Many managers believe that being empowered to create their own self-_____ budgets is the most effective method of budget preparation.

imposed

the cash budget ______

is prepared near the end of the master budget process

Using budgeting assumptions when preparing the master budget,

makes it easier to answer "what-if" questions

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the ____ budget

master

An integrated business plan that formally lays out the company's goals is called the ___ budget

master

A company with adequate cash balances at the beginning and end of the year,

may still have cash deficiencies in the middle of the year

A detailed plan used by a merchandising company that shows the amount of goods that must be purchased from suppliers during the period is called a(n) _____ ____ budget

merchandise purchases

More accurate estimates and higher motivation are generally the result of using a(n) ____ budget

participative

Budgets are used for two distinct purposes: Blank______ and Blank______.

planning; control

In companies that do not use a self-imposed budgeting process, profit targets are generally set by

top managers

For most companies a single, annual cash budget is sufficient.

False

What is subtracted from total budgeted selling and administrative expenses to determine the cash disbursements for selling and administrative expenses?

Non-cash expenses

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?

Production

What is usually the major source of receipts in the receipts section of the cash budget?

Sales

Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the ___ ___ from last year

balance; sheet

Limitations of self-imposed budgeting include ____

budgetary slack suboptimal budget recommendations

Identify the true statements about budgets

They define goals and objectives that can serve as benchmarks for evaluating subsequent performance. They encourage managers to think about and plan for the future. They coordinate the activities of the entire organization by integrating the plans of its various parts. The budgeting process can uncover potential bottlenecks before they occur.

Required borrowings on a cash budget is calculated by

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

Master budget schedules ____

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

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is ______ units.

13000

Challenging but highly achievable budgets increase the likelihood that lower-level managers will engage in undesirable behavior to secure their desired compensation.

false

The amount of goods to be acquired from suppliers during the period is shown on the ______ budget.

merchandise purchases

A budget that is prepared with the full cooperation of managers at all levels is a self-imposed or _____ budget

participative