ch 20 terms act 202 – Flashcards
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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
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budget
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The process of planning future business actions and expressing them as a formal plan is called:
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budgeting
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Effective budgeting requires all of the following except: A. Attainable goals. B. Determination of budgets by top levels of management. C. Evaluation processes that provide opportunities to explain any failures. D. Clear communication of all budgets. E. Adequate supporting documentation for the budget.
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determination of budgets by top levels of management
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Which of the following is not a benefit 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. Improved commitment to meet expected performance by those affected.
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assurance of future profits
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Which of the following is not 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. Budgeting ensures the achievement of all goals.
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budgeting ensures the achievement of all goals
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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.
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the master budget should only be prepared by top management
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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 company future plans usually expressed in monetary terms. D. The most crucial component of a company evaluation process. E. The minimum acceptable performance level. Answer: A
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a formal statement of a company's future plans usually expressed in monetary terms
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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.
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a budget committee
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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.
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from the bottom up following participatory process
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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
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budget committee
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The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting is called: A. Production budgets B. Sales budgets C. Cash budgets D. Rolling budgets E. Capital expenditures budgets
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rolling budgets
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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
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continuous budgeting
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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.
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an annual period separated into quarterly and monthly budgets
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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.
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cash budget
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Which of the following is a financial budget? A. Sales budget. B. Budgeted balance sheet. C. Production budget. D. Capital expenditure budget E. Merchandise purchasing budget.
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budgeted balance sheet
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The master budget includes: A. Only operating budgets and financial budgets. B. Only a capital expenditures budget and a cash budget. C. Only a budgeted income statement and a budgeted balance sheet. D. Only a cash budget and operating budgets. E. Operating budgets, a capital expenditure budget, and financial budgets.
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operating budgets, a capital expenditure budget, and financial budgets
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The usual starting point for preparing a master budget is forecasting or estimating: A. Expenditures B. Sales C. Production D. Income E. Cash payments
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sales
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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 expense 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.
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master budget
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. 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.
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the budgeted balance sheet
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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.
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cash budget
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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.
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activity-based budgeting
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A plan that lists the types and amounts of general and administrative expenses expected during the budget period is referred to as a: A. General and administrative expense budget. B. Sales budget. C. Cash payments budget. D. Overhead budget. E. Selling expense budget.
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general and administrative expense budget
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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
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capital expenditures budget
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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
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merchandise purchases budget
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A plan showing the units of goods to be sold and the revenue to be derived from sales, that 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
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sales budget
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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
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selling expense budget
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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.
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the capital expenditures budget
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A quantity of merchandise or materials over the minimum needed reduce the risk of running short is called: A. Just-in-time inventory. B. Budgeted stock. C. Continuous inventory. D. Capital stock. E. Safety stock.
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safety stock
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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.
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depreciation expense
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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.
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cash budget
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Which budget must be completed after a cash budget is prepared? A. Capital expenditures budget. B. Sales budget. C. Merchandise purchases budget. D. General and administrative expense budget. E. Budgeted income statement
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budgeted income statement
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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.
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estimated depreciation expense for october
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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.
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budgeted income statement
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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.
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budgeted balance sheet
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In preparing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from: A. The purchase budget. B. The sales budget. C. The capital expenditures budget. D. The budgeted income statement. E. The selling expenses budget.
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the sales budget
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Long-term liability data for the budgeted balance sheet is derived from: A. The cash budget and capital expenditures budget. B. The cash budget and sales budget. C. The cash budget and budgeted income statement. D. The sales budget and production budget. E. The asset budget and debt budget.
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the cash budget and capital expenditures budget
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In preparing financial budgets: A. The budgeted balance sheet is usually prepared last. B. The cash budget is usually not prepared. C. The budgeted income statement is usually not prepared. D. The capital expenditures budget is usually prepared last. E. The merchandise purchases budget is key.
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a budgeted balance sheet is usually prepared last
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To determine the production budget for an accounting period, consideration is not given to which of the following: A. Budgeted ending inventory. B. Budgeted beginning inventory. C. Budgeted sales. D. Budgeted overhead. E. Required units of inventory available.
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budgeted overhead
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. A plan that shows the predicted costs for direct materials, direct labor, and overhead to be incurred in manufacturing the units in the production budget is called the: A. Sales budget. B. Merchandise purchases budget. C. Production budget. D. Rolling budget. E. Manufacturing budget.
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manufacturing budget
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A plan that states the number of units to be manufactured during each future period covered by the budget, based on the budgeted sales for the period and the levels of inventory needed to support future sales, is the: A. Sales budget. B. Merchandise purchases budget. C. Production budget. D. Cash budget. E. Manufacturing budget.
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production budget
