Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Accounting
Q:
A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:
A. Budgeted income statement.
B. Budgeted balance sheet.
C. Master plan.
D. Rolling income statement.
E. Continuous income statement.
Q:
Julia's Candy Co. reports the following information from its sales account and sales budget: Sales
May
$105,000 June
93,000 Expected Sales:
July..
$90,000 August.
110,000 September
120,000 Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:
A. $ 30,000.
B. $ 82,500.
C. $112,500.
D. $120,000.
E. $202,500.
Q:
A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):
A. Rolling balance sheet.
B. Continuous balance sheet.
C. Budgeted balance sheet.
D. Cash balance sheet.
E. Operating balance sheet.
Q:
Northern Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash disbursements during June. Northern Company has an agreement with its bank to maintain a cash balance of at least $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:
A. Borrow $4,500.
B. Borrow $2,500.
C. Borrow $10,000.
D. Repay $7,500.
E. Repay $2,500.
Q:
Which of the following would not be used in preparing a cash budget for October?
A. Beginning cash balance on October 1.
B. Budgeted sales and collections for October.
C. Estimated depreciation expense for October.
D. Budgeted salaries expense for October.
E. Budgeted capital equipment purchases for October.
Q:
Which of the following budgets must be completed before a cash budget can be prepared?
A. Capital expenditures budget.
B. Sales budget.
C. Merchandise purchases budget.
D. General and administrative expense budget.
E. All of these budgets must be completed before the cash budget.
Q:
Which of the following accounts would appear on a budgeted balance sheet?
A. Income tax expense.
B. Accounts receivable.
C. Sales commissions.
D. Depreciation expense.
E. All of the choices are correct.
Q:
A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):
A. Capital expenditures budget.
B. Operating budget.
C. Rolling budget.
D. Cash budget.
E. Income statement.
Q:
When preparing the cash budget, all the following should be considered except:
A. Cash receipts from customers.
B. Cash payments for merchandise.
C. Depreciation expense.
D. Cash payments for income taxes.
E. Cash payments for capital expenditures.
Q:
If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted purchases should be:
A. $ 860
B. $ 1,100
C. $ 1,960
D. $ 9,160
E. $11,360
Q:
Stritch Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September?
A. 14,000.
B. 20,000.
C. 22,000.
D. 24,000.
E. 28,000.
Q:
A quantity of merchandise or materials over the minimum needed that reduces the risk of running short is called:
A. Just-in-time inventory.
B. Budgeted stock.
C. Continuous inventory.
D. Capital stock.
E. Safety stock.
Q:
The sales budget for Carmel shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product B for the year would be:
A. 24,500 units.
B. 22,500 units.
C. 16,500 units.
D. 26,500 units.
E. 20,500 units.
Q:
The sales budget for Carmel shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product A for the year would be:
A. 22,400 units.
B. 20,400 units.
C. 20,000 units.
D. 19,500 units.
E. 12,200 units.
Q:
The sales budget for Carmel shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Total budgeted sales of both products for the year would be:
A. $ 42,000.
B. $200,000.
C. $264,000.
D. $464,000.
E. $500,000.
Q:
Fairway's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted purchases of units in April would be:
A. 6,000 units.
B. 7,000 units.
C. 6,300 units.
D. 7,300 units.
E. Some other amount.
Q:
Ecology Co. sells a biodegradable product called Dissol and has predicted the following sales for the first four months of the current year: Jan.
Feb.
March
April Sales in Units ..
1,700
1,900
2,100
1,600 Ending inventory for each month should be 20% of the next month's sales, and the December 31 inventory is consistent with that policy. How many units should be purchased in February?
A. 1,860.
B. 1,900.
C. 1,940.
D. 1,980
E. 2,320.
Q:
A sporting goods store purchased $7,000 of ski boots in October. The store had $3,000 of ski boots in inventory at the beginning of October, and expects to have $2,000 of ski boots in inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?
A. $ 5,000.
B. $ 7,000.
C. $ 8,000.
D. $ 9,000.
E. $10,000.
Q:
A department store has budgeted sales of 12,000 men's suits in September. Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 suits. What is the dollar amount of the purchase of suits? Each suit has a cost of $75.
A. $ 750,000.
B. $ 900,000.
C. $1,050,000.
D. $1,200,000.
E. $1,350,000.
Q:
Which of the following factors is least likely to be considered in preparing a sales budget?
A. Plant capacity.
B. General economic and industry conditions.
C. Past sales volume.
D. The capital expenditures budget.
E. Proposed selling expenses, such as advertising.
Q:
A plan that lists the types and amounts of selling expenses expected during the budget period is called a(n):
A. Sales budget.
B. Operating budget.
C. Capital expenditures budget.
D. Selling expense budget.
E. Purchases budget.
Q:
A plan showing the planned sales units and the revenue to be derived from these sales, and is the usual starting point in the budgeting process, is called the:
A. Operating budget.
B. Business plan.
C. Income statement budget.
D. Merchandise purchases budget.
E. Sales budget.
Q:
A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:
A. Selling expenses budget.
B. Merchandise purchases budget.
C. Sales budget.
D. Cash budget.
E. Capital expenditures budget.
Q:
A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a:
A. Cash budget.
B. Capital expenditures budget.
C. Rolling budget.
D. Sales budget.
E. Production budget.
Q:
A June sales forecast projects that 6,000 units are going to be sold at a price of $10.50 per unit. The desired ending inventory of units is 15% higher than the beginning inventory of 1,000 units. Total June sales are anticipated to be:
A. $63,000.
B. $67,500.
C. $61,250.
D. $74,250.
E. $60,000.
Q:
A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a:
A. General and administrative expense budget.
B. Sales budget.
C. Cash payments budget.
D. Overhead budget.
E. Selling expense budget.
Q:
A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is:
A. Traditional budgeting.
B. Management budgeting.
C. Master budgeting.
D. Activity-based budgeting.
E. Cash budgeting.
Q:
Which of the following budgets is not an operating budget?
A. Sales budget.
B. Cash budget.
C. General and administrative expense budget.
D. Selling expenses budget.
E. Merchandise purchases.
Q:
The master budget process usually ends with:
A. The production budget.
B. The sales budget.
C. The selling expense budget.
D. The budgeted balance sheet.
E. The overhead budget.
Q:
The usual starting point for preparing a master budget is forecasting or estimating:
A. Expenditures.
B. Sales.
C. Production.
D. Income.
E. Cash payments.
Q:
The master budget includes:
A. Operating budgets.
B. A capital expenditures budget.
C. A budgeted income statement.
D. A cash budget.
E. All of the budgets are included in the master budget.
Q:
Financial budgets include all the following except the:
A. Sales budget.
B. Budgeted balance sheet.
C. Budgeted income statement.
D. Cash budget.
E. All of these are financial budgets.
Q:
Operating budgets include all the following budgets except the:
A. Sales budget.
B. Selling expense budget.
C. Cash budget.
D. Merchandise purchases budget.
E. General and administrative expense budget.
Q:
A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a:
A. Master budget.
B. Cash budget.
C. Capital expenditures budget.
D. Rolling budget.
E. Production budget.
Q:
Assuming a bottom-up process of budget development, which of the following should be initially responsible for developing sales estimates?
A. The budget committee.
B. The accounting department.
C. The sales department.
D. Top management.
E. The marketing department.
Q:
The usual budget period is:
A. An annual period of 250 working days.
B. A monthly period separated into daily budgets.
C. A quarterly period separated into weekly budgets.
D. An annual period separated into weekly budgets.
E. An annual period separated into quarterly and monthly budgets.
Q:
The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:
A. Participatory budgeting.
B. Capital budgeting.
C. Balanced budgeting.
D. Continuous budgeting.
E. Primary budgeting.
Q:
The most useful budget figures are developed:
A. From the "top-down".
B. From the "bottom-up" following a participatory process.
C. Solely by the budget committee.
D. By the CEO.
E. After the accounting period has begun.
Q:
Guidance for preparing a master budget is usually the responsibility of:
A. The company CEO.
B. The marketing department.
C. A budget committee.
D. The chief financial officer.
E. Lower level management.
Q:
The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting are called:
A. Production budgets.
B. Sales budgets.
C. Cash budgets.
D. Rolling budgets.
E. Capital expenditures budgets.
Q:
The overall coordinating activity of the budget process is the responsibility of the:
A. Chief Accounting Officer.
B. Chief Executive Officer (CEO).
C. Chief Financial Officer (CFO).
D. Budget Committee.
E. Board of Directors.
Q:
A budget is best described as:
A. A formal statement of a company's future plans usually expressed in monetary terms.
B. A master control device.
C. An informal statement of companys future plans usually expressed in monetary terms.
D. The most crucial component of a companys evaluation process.
E. The minimum acceptable performance level.
Q:
Which of the following statements about budgeting is false?
A. Budgeting is an aid to planning and control.
B. Budgets create standards for performance evaluation.
C. Budgets help coordinate the activities of the entire organization.
D. Budgeting forces managers to think ahead and formalize long-range objectives.
E. The master budget should only be prepared by top management.
Q:
Which of the following is a benefit derived from budgeting?
A. Budgeting focuses management's attention on the future.
B. Budgeting provides coordination of departments.
C. Budgeting provides a basis for evaluating performance.
D. Budgeting provides motivation for managers and employees.
E. All of the choices are benefits derived from budgeting.
Q:
Which of the following is not a result of following a well-designed budgeting process?
A. Improved decision-making processes.
B. Improved performance evaluations.
C. Improved coordination of business activities.
D. Assurance of future profits.
E. All of these are benefits of effective budgeting.
Q:
For budgets to be effective:
A. Goals should be attainable.
B. Employees affected by a budget should be consulted when it is prepared.
C. Evaluations should be made carefully with opportunities to explain any failures.
D. They should be properly applied to avoid negative effects.
E. All of the options are correct.
Q:
The process of planning future business actions and expressing them as a formal plan is called:
A. Budgeting.
B. Cost accounting.
C. Managerial accounting.
D. Variance analysis.
E. Standard cost analysis.
Q:
A formal statement of future plans, usually expressed in monetary terms, is a:
A. Variance report.
B. Position statement.
C. Budget.
D. Prospectus.
E. Variance analysis.
Q:
Production budgets should always show both budgeted units of product and costs.
Q:
A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, and 30% the following month. Projected sales for January, February, and March are $75,000, $92,000 and $60,000, respectively. The March expected cash receipts from all current and prior credit sales are $80,500.
Q:
The financial budgets include the cash budget and the capital expenditures budget.
Q:
Financial budgets are normally completed after preparation of operating and capital expenditure budgets.
Q:
The budgeted balance sheet is prepared from data contained in the previously prepared components of the master budget.
Q:
A cash budget is a plan that includes the expected cash receipts and cash expenditures during each of the periods that it covers.
Q:
Part of the cash budget is based on information taken from the capital expenditures budget.
Q:
If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and cost of goods sold is expected to be $10,260, then budgeted purchases should be $9,160.
Q:
A manufacturing budget should include a list of equipment to be scrapped and additional equipment to be purchased if the proposed production budget is carried out.
Q:
The selling expenses budget is normally prepared before the sales budget because selling expenses affect the amount of sales.
Q:
Traditional budgeting is generally better than activity-based budgeting when attempting to reduce costs by eliminating non-value-added activities.
Q:
Activity-based budgeting is a budget system based on expected activities and their activity levels, which helps management plan for the resources required.
Q:
A master budget refers to a company's sales budget that includes all of its segments or departments.
Q:
The budget process is a continuous activity of planning, revising, and evaluating business activities.
Q:
The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet.
Q:
The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets.
Q:
The merchandise purchases budget is the starting point for preparing the master budget.
Q:
The merchandise purchases budget depends on information provided by the sales budget.
Q:
The budgets within the master budget must be prepared in a definite sequence as dictated by GAAP.
Q:
A rolling budget is a specific budget application relevant only to a merchandising company.
Q:
Larger, more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business.
Q:
The responsibility for coordinating the preparation of a master budget should be assigned to the Chief Executive Officer.
Q:
The task of preparing a budget should be the sole task of the most important department in an organization.
Q:
Continuous budgeting is the practice of preparing a new budget for a selected number of future periods and replacing budgets for periods that have lapsed.
Q:
Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.
Q:
A budget is a formal statement of future plans, usually expressed in monetary terms.
Q:
One of the major benefits of formal budgeting is the positive effect it can have on employee attitudes if applied correctly.
Q:
Budgets are normally more effective when all levels of management are involved in the budgeting process.
Q:
A budget can be an effective means of communicating management's plans to the employees of a business.
Q:
Consulting the persons affected by a budget when it is prepared can provide an effective means of motivation and cooperation.
Q:
Describe what happens to the net income of a company under each of the following assumptions: (a) Sales volume is less than break-even sales. (b) Sales volume is greater than break-even sales. (c) Sales volume is equal to the break-even point.
Q:
What are the basic assumptions of CVP analysis with regard to variable cost, fixed cost, and selling price per unit? (Assume a single product).