Quiz
B2- Budgeting
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Questions in this quiz (31)
1There are various budgets within the master budget cycle. One of these budgets is the production budget. Which one of the following best describes the production budget?
- A.It includes required direct labor hours.
- B.It includes required material purchases.
- CIt is calculated from the desired ending inventory and the sales forecast.
- D.It aggregates the monetary details of the operating budget.
2Which of the following types of budgets is the last budget to be produced during the budgeting process?
- ACash
- BCapital.
- CCost of goods sold
- DMarketing
3A static budget contains which of the following amounts?
- ABudgeted costs for actual output.
- BActual costs for budgeted output.
- CBudgeted costs for budgeted output.
- DActual costs for actual output.
4Which of the following would be most impacted by the use of the percentage of sales forecasting method for budgeting purposes?
- AAccounts payable
- BMortgages payable
- C.Bonds payable.
- DCommon stock
5Which one of the following statements regarding selling and administrative budgets is most accurate?
- ASelling and administrative budgets should be a certain percentage of sales, and should be developed using a bottom-up approach.
- BSelling and administrative budgets are difficult to allocate by month and are best presented as one number for the entire year.
- CSelling and administrative budgets are fixed in nature
- DSelling and administrative budgets need to be detailed in order that the key assumptions can be better understood.
6A firm develops an annual cash budget in order to:
- ASupport the preparation of its cash flow statement for the annual report.
- BAscertain which capital expenditure projects are feasible and which capital expenditure projects should be deferred.
- CBalance the noncash and cash activities of the company.
- DAvoid the opportunity costs of noninvested excess cash and minimize the cost of interim financing.
7The cash budget is a useful tool in the planning process. Which of the following is not a true statement relating to the preparation of a cash budget?
- AThe cash budget is typically done before all other budgets
- BThe cash budget shows itemized cash receipts and disbursements during the period, including the financing activities and the beginning and ending cash balances.
- CThe cash budget alerts management to periods when there will be excess cash available for investment.
- DThe cash budget is usually broken down into monthly periods
8The cash budget provides management with information. Which of the following is not an example of information a cash budget provides?
- AAvailability of funds for distribution to owners.
- BThe need for internal financing
- CAvailability of funds for investment purposes.
- DAvailability of funds for the repayment of deb
9Which of the following is a characteristic of a flexible budget?
- AIsolates the impact of variable costs on the overall budget.
- BAllows for modification during the budgeted period.
- CProvides budgeted numbers for various activity levels.
10Which of the following budgets provides information for preparation of the owner's equity section of a budgeted balance sheet?
- ACapital expenditures budget.
- BCash budget.
- CSales budget.
- DBudgeted income statement.
11Which of the following is a disadvantage of participative budgeting?
- AIt is more time consuming.
- B.It is less accurate.
- CIt decreases motivation
- D.It decreases acceptance. d.It is less accurate.
12The information contained in a cost of goods manufactured budget would most directly relate to the:
- AMaterials used, direct labor, overhead applied, and finished goods inventories budgets.
- BMaterials used, direct labor, overhead applied, work-in-process inventories, and finished goods inventories budgets.
- CMaterials used, direct labor, overhead applied, and work-in-process inventories budgets.
- DMaterials used, direct labor, overhead applied, unit production, and raw materials inventories budgets.
13Organic Enterprises cultivates potted plants and hybrids. Management conducted a careful engineering study of product requirements and has developed standards to control production. Standards of this type are also referred to as:
- AAuthoritative standards
- BParticipative standards.
- CAttainable standards.
- DIdeal standards
14All of the following are considered operating/financial budgets, except the:
- AProduction budget.
- BSales budget.
- CCash budget.
- DCapital budget.
15Fargo, Mfg., a small business, is developing a budget for next year. Which of the following steps should Fargo perform first?
- AIdentify costs of Fargo's forecasted sales volume.
- BDetermine the price of Fargo's products.
- CCompute the dollar amount of Fargo's forecasted sales.
- DForecast Fargo's sales volume
16There are various budgets within the master budget cycle. One of these budgets is the production budget. Which one of the following best describes the production budget?
- AIt includes required direct labor hours.
- BIt includes required material purchases.
- CIt is calculated from the desired ending inventory and the sales forecast.
- DIt aggregates the monetary details of the operating budget.
17The basic difference between a master budget and a flexible budget is that a master budget is:
- AOnly used before and during the budget period and a flexible budget is only used after the budget period.
- BFor an entire production facility and a flexible budget is applicable to single departments only.
- CBased on a fixed standard and a flexible budget allows management latitude in meeting goals.
- DBased on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.
18Which of the following is most useful when risk is being prioritized?
- ALow and high probability exposures
- BLow and high-degree loss exposures
- CExpected value.
- DUncontrollable risks.
19The goals and objectives upon which an annual profit plan is most effectively based are:
- AFinancial and quantitative measures.
- BQualitative measures of organizational activity such as product innovation leadership, product quality levels, and product safety.
- CA combination of financial, quantitative, and qualitative measures.
- DQuantitative measures such as growth in unit sales, number of employees, and manufacturing capacity.
20Which one of the following statements regarding the difference between a flexible budget and a static budget is correct?
- AA flexible budget primarily is prepared for planning purposes while a static budget is prepared for performance evaluation.
- BA flexible budget provides cost allowances for different levels of activity whereas a static budget provides costs for one level of activity
- CA flexible budget includes only variable costs whereas a static budget includes only fixed costs.
- DA flexible budget is established by operating management while a static budget is determined by top management.
21Which of the following listings correctly describes the order in which the four types of budgets must be prepared?
- ACash disbursements, direct materials purchases, production, sales
- BSales, production, direct materials purchases, cash disbursements.
- CSales, direct materials purchases, production, cash disbursements
- DProduction, direct materials purchases, sales, cash disbursements.
22Pro forma financial statements are part of the budgeting process. Normally, the last pro forma statement prepared is
- ACapital expenditure plan
- BIncome statement.
- CStatement of cash flows.
- DStatement of cost of goods sold.
23The basic difference between a master budget and a flexible budget is that a master budget is:
- ABased on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.
- BOnly used before and during the budget period and a flexible budget is only used after the budget period.
- CBased on a fixed standard, whereas a flexible budget allows management latitude in meeting goals.
- DFor an entire production facility whereas a flexible budget is applicable to single departments only
24After the goals of the company have been established and communicated, the next step in the planning process would be the development of the
- ASelling and administrative budget.
- BCapital expenditure budget.
- CSales budget.
- DProduction budget
25Which one of the following items is the last schedule to be prepared in the normal budget preparation process?
- ACash budget.
- BCost of goods sold budget
- CSelling expense budget.
- DManufacturing overhead budget
26Which one of the following items should be done first when developing a comprehensive budget for a manufacturing company?
- ADetermination of equipment acquisitions
- BDevelopment of a sales budget.
- CDetermination of the advertising budget
- DPreparation of a pro forma income statement
27When preparing the series of annual operating budgets, management usually starts the process with the:
- ABalance sheet
- BCapital budget
- CSales budget.
- DProduction budget.
28The financial budget process includes:
- AThe budgeted balance sheet.
- BThe budgeted statement of cash flows
- CAll of the answer choices are correct.
- DThe cash budget.
29Which one of the following items would have to be included for a company preparing a schedule of cash receipts and disbursements for the calendar year Year 1?
- AThe amount of uncollectible customer accounts for Year 1.
- B.Dividends declared in November Year 1 to be paid in January Year 2 to shareholders of record as of December Year 1.
- CA purchase order issued in December Year 1 for items to be delivered in February Year 2
- DBorrowing funds from a bank on a note payable taken out in June Year 1 and agreeing to pay the principal and interest in June Year 2.
30The cash budget must be prepared before you can complete the:
- ACapital expenditure budget.
- BForecasted balance sheet.
- CProduction budget.
- DForecasted income statement
31Which of the following options lists the correct sequence for preparing budgets?
- ASales budget, production budget, budgeted balance sheet, budgeted income statement.
- B.Material purchases budget, production budget, cost of goods sold budget, cash receipts budget.
- CCost of goods sold budget, sales budget, budgeted income statement, budgeted balance sheet.
- DProduction budget, material purchases budget, budgeted income statement, budgeted balance sheet
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- Técnico de Nivel Superior B2 Quiz on B2- Budgeting, created by Harpratap Singh on 12/04/2015.
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- Harpratap Singh
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- English
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