Horngren Ima16 Tif 07 GE

Introduction Introduction to Management Management Accounting, Accounting, 16e, Global Global Edition (Horngren) Chapter 7 Introduction to Budgets and Preparing the Master Budget Budget

7.1 Questions 1) Which of the following statements about budgets and budgeting is FALSE? A) Budgets hel coo!dinate financial and oe!ational o e!ational acti"ities. B) #he "ast ma$o!it% of manage!s use budgeting as an effecti"e cost management tool. &) Budgeting is the !ocess of fo!mulating an o!gani'ation(s lans. ) *anage!s do not use budgets fo! e!fo!mance e"aluation. Answe!+  iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) n !actice2 when de"eloing a budget2 two e3t!emes used fo! guidance a!e 44444444 and 44444444. A) a!ticiati"e budget5 'e!obase budget B) st!ategic budget5 long!ange budget &) financial lanning budget5 st!ategic budget ) 'e!obase budget5 acti"ities of cu!!ent o! !io! e!iod Answe!+  iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) A ma$o! benefit of effecti"e budgeting is that 44444444. A) it comels manage!s to thin0 ahead B) it aids manage!s in communicating ob$ecti"es to emlo%ees &) it !o"ides benchma!0s to e"aluate subseuent e!fo!mance ) all of the abo"e Answe!+  iff+ 1 L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget

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8) A9n) 44444444 sta!ts with the assumtion that cu!!ent acti"ities in a coman% will not automaticall% continue in the ne3t e!iod. A) acti"it%based budget B) st!ategic budget &) maste! budget ) 'e!obase budget Answe!+  iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) #he most effecti"e budget !ocesses facilitate communication f!om to management to 444444 44 and f!om lowe! le"el manage!s and emlo%ees to 44444444. A) the SE&5 the audit committee B) stoc0holde!s5 c!edito!s &) lowe! le"el manage!s and emlo%ees5 to management ) c!edito!s5 stoc0holde!s Answe!+ & iff+ 1 L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;)

8) A9n) 44444444 sta!ts with the assumtion that cu!!ent acti"ities in a coman% will not automaticall% continue in the ne3t e!iod. A) acti"it%based budget B) st!ategic budget &) maste! budget ) 'e!obase budget Answe!+  iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) #he most effecti"e budget !ocesses facilitate communication f!om to management to 444444 44 and f!om lowe! le"el manage!s and emlo%ees to 44444444. A) the SE&5 the audit committee B) stoc0holde!s5 c!edito!s &) lowe! le"el manage!s and emlo%ees5 to management ) c!edito!s5 stoc0holde!s Answe!+ & iff+ 1 L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;)

7) A ma$o! d!awbac0 of using u sing histo!ical !esults fo! $udging cu!!ent e!fo!mance is that 44444444. 4444444 4. A) ast !esults ma% be inaccu!ate B) !esults ma% !efe! to a diffe!ent manage! &) inefficiencies ma% be concealed in ast !esults ) manage!s ma% ha"e coo0ed the boo0s Answe!+ & iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) A budget is an e3amle of an info!mal business lan. Answe!+ FALSE iff+ 1 L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ) A budget is a ualitati"e e3!ession of a lan of action. Answe!+ FALSE iff+ 1 L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1@) #he!e a!e fewe! benefits f!om budgeting in comanies with unce!tain un ce!tain o! comlicated en"i!onments. Answe!+ FALSE iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 11) Budgeted e!fo!mance goals gene!all% !o"ide a bette! basis fo! e" aluating actual e!fo!mance than ast e!fo!mance. Answe!+ #/E iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1,) A ma$o! d!awbac0 of using histo!ical !esults fo! $udging cu!!ent e!fo!mance is that inefficiencies ma% be be concealed in ast e!fo!mance. Answe!+ #/E iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 16) An effecti"e budget !ocess communicates f!om the to down2 but not f!om the bottom u. Answe!+ FALSE iff+ , L-+ 71 AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7., Questions 1) Facto!s that affect emlo%ee accetance of budgets include 44444444. A) e!cei"ed attitude of to management towa!ds budgeting bu dgeting B) le"el of a!ticiation b% emlo%ees in budget bu dget !ocess &) deg!ee of alignment between budget and emlo%ees( e!fo!mance goals ) all of the abo"e Answe!+  iff+ 1 L-+ 7, AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) *isalignment between the 44444444 st!essed in budgets and 44444444 used to !ewa!d emlo%ees and manage!s can limit the ad"antages of budgeting. b udgeting. A) e!fo!mance goals5 a!ticiati"e goals B) e!fo!mance goals5 e!fo!mance measu!es &) sales goals5 bonuses ) !esou!ce goals5 bonuses Answe!+ B iff+ 1 L-+ 7, AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


6) -ne wa% to !educe negati"e attitudes of manage!s towa!d budgets is b% 44444444. A) 'e!obased budgeting B) acti"itiesbased budgeting &) long !ange lanning ) a!ticiati"e budgeting Answe!+  iff+ 1 L-+ 7, AA&SB+ /eflecti"e thin0ing s0ills s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8) 44444444 budgeting is when budgets a!e fo!mulated with the acti"e in"ol"ement of all affected emlo%ees. A) /olling B) #eam &)

7.6 Questions 1) Budgeting can !esult in incenti"es to lie and cheat that unde!mine 44444444. A) a coman%(s ethical standa!ds B) a coman%(s "alue chain &) standa!d of ob$ecti"it% !omulgated b% the nstitute of *anagement Accountants ) none of the abo"e Answe!+ A iff+ 1 L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) *anage!s ma% 44444444 thei! budgeted costs o! 44444444 thei! budgeted !e"enue to c!eate a budget ta!get that is easie! to achie"e. A) unde!state5 o"e!state B) o"e!state5 unde!state &) unde!state5 unde!state ) o"e!state5 o"e!state Answe!+ B iff+ 1 L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) Which of the following is =-# a !eason fo! budgeta!% slac0? A) to buffe! manage!s f!om budget cuts imosed b% to management B) to !o"ide !otection against cost inc!eases o! !e"enue sho!tfalls due to unfo!eseen e"ents &) to facilitate attainment of e!fo!mance goals ) to imose a fo!mal st!uctu!e fo! lanning u!oses Answe!+  iff+ 1 L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8) *isuse of budgets can lead to incenti"es to cheat and lie. &heating and l%ing ma% ta0e the fo!m of 44444444. A) ma0ing sho!t!un decisions to inc!ease !ofits that a!e not in the coman%(s best long!un inte!ests B) budgeta!% slac0 &) dec!easing !ofits when actual !ofits significantl% e3ceed the !ofit ta!get ) all of the abo"e Answe!+  iff+ , L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) Cow can a coman% a"oid l%ing b% emlo%ees when !ea!ing a budget? A) !ewa!d good budget fo!ecasts B) !ewa!d good e!fo!mance against the budget &) !ewa!d good budget fo!ecasts and !ewa!d good e!fo!mance against the budget ) !ewa!d good !ecies fo! coo0ing the boo0s Answe!+ & iff+ 1 L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;) *anage!s ma% lie to inc!ease the !esou!ces allocated to thei! dea!tments. Answe!+ #/E iff+ , L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7) Budgeta!% slac0 hels buffe! manage!s f!om budget cuts imosed b% highe!le"el management. Answe!+ #/E iff+ , L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) D&oo0ing the boo0sD !efe!s to !eco!ding fictitious sales o! omitting costs. Answe!+ #/E iff+ , L-+ 76 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7.8 Questions 7 Copyright © 2014 Pearson Education

1) Whe!e does a coman% find fo!ecasted financial statements fo! a fi"e to ten %ea! e!iod? A) st!ategic lan B) maste! budget &) !olling budget ) long!ange lan Answe!+  iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) A coman% identifies the following goals and ob$ecti"es+ nc!ease sales 1@ e!cent each %ea!. nc!ease !ofits : e!cent each %ea!. nc!ease total lant assets : e!cent each %ea!. Which of the following budgets identifies the o"e!all goals and ob$ecti"es of an o!gani'ation? A) sales budget B) maste! budget &) st!ategic lan ) financial lanning model Answe!+ & iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) A manage! has se"e!al fo!ecasts of sales co!!esonding to diffe!ent le"els of ad"e!tising. #he manage! decides to imlement 1 million of ad"e!tising in the ne3t fiscal %ea!. At this le"el of ad"e!tising2 the manage! uses the 44444444 in the 44444444. A) sales goal5 sales fo!ecast B) sales budget5 sales fo!ecast &) sales fo!ecast5 sales goal ) sales fo!ecast5 sales budget Answe!+  iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8) Which schedule gi"es the e3ected sales unde! a gi"en set of conditions? A) sales goal B) sales budget &) sales fo!ecast ) maste! budget Answe!+ & iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) mo!tant facto!s used to fo!ecast sales fo! a coman% include all of the following items E&E<# 44444444. A) changes in fi!m(s !ices B) gene!al economic conditions &) changes in !oduct mi3 ) la%out of !oduction euiment Answe!+  iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;) ecisions made du!ing long!ange lanning include 44444444. A) addition o! deletion of !oduct line B) location of new lant &) u!chase of euiment ) all of the abo"e Answe!+  iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


7) =o matte! how man% technical e3e!ts a coman% uses in fo!ecasting2 the sales budget should ultimatel% be the !esonsibilit% of the 44444444. A) economists B) &E&) line manage!s ) ma!0et !esea!ch staff Answe!+ & iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) Which of the following statements is FALSE about a st!ategic lan? A) A st!ategic lan does not deal with a secific time e!iod. B) A st!ategic lan does not !oduce fo!ecasted financial statements. &) A st!ategic lan guides da%toda% oe!ations. ) A st!ategic lan !o"ides an o"e!all f!amewo!0 fo! a long!ange lan. Answe!+ & iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ) Which of the following statements about long!ange lans is FALSE? A) Long!ange lans !o"ide fo!ecasted financial statements fo! fi"e to ten %ea! e!iods. B) Long!ange lans guide da%toda% oe!ations. &) &omanies coo!dinate long!ange lans with caital budgets. ) A decision made du!ing long!ange lanning is the acuisition of a lant building. Answe!+ B iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1@) Which of the following budgets identifies the o"e!all goals and ob$ecti"es of the o!gani'ation? A) caital budget B) cash budget &) maste! budget ) st!ategic lan Answe!+  iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 11) When e3amining a maste! budget2 whe!e does a coman% find the lanned e3enditu!es fo! facilities and 10 Copyright © 2014 Pearson Education

euiment? A) oe!ating e3ense budget B) caital budget &) oe!ating budget ) u!chases budget Answe!+ B iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1,) A sales budget is a !ediction of sales unde! a gi"en set of conditions. Answe!+ FALSE iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 16) Accu!ate sales fo!ecasting is essential to effecti"e budgeting. Answe!+ #/E iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 18) Sales fo!ecasts a!e usuall% !ea!ed unde! the di!ection of the to sales e3ecuti"e. Answe!+ #/E iff+ 1 L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1:) #he sales budget should be the !esonsibilit% of line management. Answe!+ #/E iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1;) #he most fo!wa!dloo0ing and least detailed budget is the st!ategic lan. Answe!+ #/E iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 17) A decision made du!ing long!ange lanning includes whethe! to delete a !oduct f!om a coman%(s !oduct line. Answe!+ #/E iff+ , L-+ 78 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7.: Questions 1) Which budget guides da%toda% oe!ations in a business? A) sales budget B) st!ategic lan &) maste! budget ) long!ange lan Answe!+ & iff+ 1 L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) n a maste! budget2 the schedule of cash disbu!sements fo! oe!ating e3enses is used to !ea!e the 44444444. A) caital budget B) u!chases and cost of goods sold budget &) sales budget ) cash budget Answe!+  iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


6) n a maste! budget2 the schedule of cash disbu!sements fo! u!chases of in"ento!% is used to !ea!e the 44444444. A) oe!ating e3ense budget B) u!chases budget &) caital budget ) cash budget Answe!+  iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8) n a maste! budget2 a caital budget is used to !ea!e the 44444444. A) sales budget B) budgeted income statement &) u!chases and cost of goods sold budget ) cash budget Answe!+  iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) #he maste! budget is a detailed and com!ehensi"e anal%sis of the 44444444 of the 44444444 lan. A) fi!st month5 acti"it%based st!ategic B) fi!st month5 st!ategic &) fi!st %ea!5 continuous ) fi!st %ea!5 long!ange Answe!+  iff+ 1 L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;) #he two main comonents of the maste! budget a!e the 44444444. A) cash budget and the caital budget B) u!chases budget and the budgeted income statement &) budgeted income statement and the budgeted balance sheet ) oe!ating budget and the financial budget Answe!+  iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7) #he 44444444 budget focuses on the budgeted income statement and the suo!ting schedules. 13 Copyright © 2014 Pearson Education

A) financial B) oe!ating &) oe!ating e3ense ) u!chases and cost of goods sold Answe!+ B iff+ 1 L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) Which of the following is =-# a comonent of the oe!ating budget? A) sales budget B) oe!ating e3ense budget &) caital budget ) budgeted income statement Answe!+ & iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ) Which of the following is =-# a comonent of the oe!ating budget? A) caital budget B) u!chases and cost of goods sold budget &) budgeted income statement ) oe!ating e3ense budget Answe!+ A iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1@) Which of the following is =-# a comonent of the financial budget? A) caital budget B) cash budget &) budgeted balance sheet ) budgeted income statement Answe!+  iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 11) Which of the following is a comonent of the financial budget? A) budgeted balance sheet B) budgeted income statement 14 Copyright © 2014 Pearson Education

&) sales budget ) u!chases budget Answe!+ A iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1,) #he financial budget includes 44444444. A) the caital budget and the sales budget onl% B) the caital budget and the budgeted income statement onl% &) the caital budget2 the cash budget and the budgeted balance sheet ) the cash budget and the u!chases budget onl% Answe!+ & iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 16) A cash budget is a business lan that includes a set of schedules and financial statements. Answe!+ FALSE iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 18) #he elements of a financial budget fo! a me!chandising fi!m include the caital budget2 the cash budget and the budgeted balance sheet. Answe!+ #/E iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1:) An oe!ating budget is the ma$o! a!t of the maste! budget that focuses on the balance sheet and suo!ting schedules. Answe!+ FALSE iff+ , L-+ 7: AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7.; Questions 1) #he final outut of the oe!ating budget is 44444444. A) budgeted statement of stoc0holde!s( euit% B) budgeted balance sheet &) budgeted income statement ) budgeted statement of cash flows Answe!+ & iff+ , L-+ 7; AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) #he final outut of the financial budget is 44444444. A) budgeted statement of stoc0holde!s( euit% B) budgeted balance sheet &) budgeted income statement ) budgeted statement of cash flows Answe!+ B iff+ , L-+ 7; AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) What is the seuence of stes9o!de! of !ea!ation) fo! the oe!ating budget? A) sales budget2 oe!ating e3ense budget2 u!chases and cost of goods sold budget B) sales budget2 caital budget2 oe!ating e3ense budget &) sales budget2 u!chases and cost of goods sold budget2 schedule of cash collections f!om custome!s2 oe!ating e3ense budget ) sales budget2 schedule of cash collections f!om custome!s2 u!chases and cost of goods sold budget2 schedule of cash disbu!sements fo! u!chases2 oe!ating e3ense budget Answe!+  iff+ , L-+ 7; AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8) What is the seuence of stes9o!de! of !ea!ation) fo! the financial budget? A) sales budget2 caital budget2 cash budget2 budgeted income statement B) sales budget2 oe!ating e3ense budget2 u!chases and cost of goods sold budget &) caital budget2 cash budget2 budgeted balance sheet ) disbu!sements fo! u!chases2 disbu!sements fo! oe!ating e3enses2 cash budget Answe!+ & iff+ , L-+ 7; AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) What is the seuence of stes in !ea!ing the maste! budget? A) -utut f!om the financial budget is used to !ea!e the oe!ating budget. B) -utut f!om the oe!ating budget is used to !ea!e the financial budget. &) -utut f!om the financial budget is used to !ea!e the budgeted income statement. ) -utut f!om the financial budget is used to !ea!e the oe!ating e3ense budget. Answe!+ B iff+ , L-+ 7; AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7.7 Questions 1) Which budget is used to de"elo the schedule of cash disbu!sements fo! oe!ating e3enses? A) u!chases and cost of goods sold budget B) cash disbu!sements budget &) oe!ating e3ense budget ) cash budget Answe!+ & iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,) What item is =-# a line item on the u!chases and cost of goods sold budget? A) u!chases of in"ento!% B) sales &) beginning in"ento!% ) desi!ed ending in"ento!% Answe!+ B iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) #he schedule of cash disbu!sements fo! u!chases uses the 44444444. A) sales budget B) oe!ating e3ense budget &) schedule of cash disbu!sements fo! oe!ating e3enses ) u!chases and cost of goods sold budget Answe!+  iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8) #he schedule of cash collections f!om custome!s has 44444444. A) cash sales onl% B) collections on c!edit sales onl% &) A and B ) budgeted u!chases Answe!+ & iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget :) #he schedule of cash disbu!sements fo! oe!ating e3enses does =-# ha"e 44444444. A) !ent e3ense B) insu!ance e3ense &) wages e3ense ) amo!ti'ation e3ense on atents Answe!+  iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;) When !ea!ing the budgeted income statement2 which of the following is the sou!ce fo! the amount of &ost of Goods Sold? 18 Copyright © 2014 Pearson Education

A) sales budget B) oe!ating e3ense budget &) schedule of disbu!sements fo! oe!ating e3ense ) u!chases and cost of goods sold budget Answe!+  iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7) When !ea!ing the budgeted income statement2 which of the following is the sou!ce fo! the amount of oe!ating e3enses? A) schedule of disbu!sements fo! oe!ating e3enses B) u!chases budget &) schedule of disbu!sements fo! u!chases ) oe!ating e3ense budget Answe!+  iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) When !ea!ing the budgeted income statement2 which of the following is the sou!ce fo! the amount of sales? A) sales budget B) u!chases budget &) oe!ating e3ense budget ) schedule of cash collections f!om custome!s Answe!+ A iff+ 1 L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


) #he fi!st ste in !ea!ing the maste! budget is the 44444444. A) cash budget B) caital budget &) oe!ating e3ense budget ) sales budget Answe!+  iff+ 1 L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1@) #he fi!st ste in !ea!ing the financial budget is the 44444444. A) cash budget B) caital budget &) oe!ating e3ense budget ) sales budget Answe!+ B iff+ 1 L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 11) Fo! ne3t %ea!2 a"id &oman% has budgeted sales of >2@@@ units2 ta!get ending in"ento!% of 12@@@ units and a beginning in"ento!% of 6@@ units. Cow man% units should be u!chased? A) :27@@ B) ;26@@ &) 727@@ ) >27@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1,) *atthew &oman% has a sales budget fo! ne3t month of 8@@2@@@. &ost of goods sold is e3ected to be 8@H of sales. All units a!e aid fo! in the month following u!chase. #he beginning in"ento!% is :2@@ @ and an ending in"ento!% of 1,2@@@ is desi!ed. Beginning accounts a%able is 7;2@@@. #he cost of goods sold fo! ne3t month is 44444444. A) 18@2@@@ B) 1;@2@@@ &) 17,2@@@ ) ,,@2@@@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 16) *ichael &oman% has a sales budget fo! ne3t month of 6@@2@@@. &ost of goods sold is e3ected to be :@H of sales. All units a!e aid fo! in the month following u!chase. #he beginning in"ento!% is 1@2@ @@ and an ending in"ento!% of 1,2@@@ is desi!ed. Beginning accounts a%able is 7;2@@@. #he u!chases fo! ne3t month a!e 44444444. A) 16>2@@@ B) 18@2@@@ &) 1:@2@@@ ) 1:,2@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


18) Ben$amin &oman% has the following data+ *onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales 1@>2@@@ 16,2@@@ 1882@@@ 1,@2@@@

&ost of goods sold a"e!age ;@H of sales. #he in"ento!% at ecembe! 61 was 1288@. esi!ed ending in"ento!% le"els a!e ,@H of ne3t month(s sales at cost. What is the desi!ed ending in"ento!% "alue at Feb!ua!% ,>? A) 1:2>8@ B) 172,>@ &) ,;28@@ ) ,>2>@@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1:) ownstai!s &oman% has the following sales budget fo! the last si3 months of ,@1@+ Iul% August Setembe! -ctobe! =o"embe! ecembe!

1@@2@@@ >@2@@@ 11@2@@@ >@2@@@ 1@@2@@@ 82@@@

Cisto!icall%2 the cash collection of sales has been as follows+ ;:H of sales collected in month of sale ,:H of sales collected in month following sale >H of sales collected in second month following sale ,H of sales uncollectible What a!e the e3ected cash collections of sales in -ctobe!? A) 72:@@ B) >:2@@ &) ,28@@ ) 2:@@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1;) stai!s &oman% has the following data+ 22 Copyright © 2014 Pearson Education

*onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales 1@>2@@@ 16,2@@@ 1882@@@ 1,@2@@@

#he g!oss !ofit !ate is 8@H of sales and ending in"ento!% at ecembe! 61 was 1288@. esi!ed ending in"ento!% le"els a!e 6@H of ne3t month(s sales at cost. What a!e the e3ected total u!chases fo! Feb!ua!%? A) 72,@@ B) >126;@ &) 1@,2;@ ) 1@:21,@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 17) Seb!ing &oman% has the following data+ *onth A!il *a% Iune Iul% August

Budgeted Sales 8@2@@@ 882@@@ :@2@@@ :,2@@@ 8>2@@@

#he cost of goods sold e!centage is 7@H of sales and the desi!ed ending in"ento!% le"el is ,:H of ne3t month(s sales at cost. 44444444 was the beginning in"ento!% on *a% 1. A) 626@@ B) 727@@ &) >27:@ ) 112@@@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1>) Segal &oman% has the following data+ *onth *a% Iune Iul% August

Budgeted Sales 8;2@@@ :@2@@@ :,2@@@ 82@@@

#he cost of goods sold e!centage is >@H of sales and the desi!ed ending in"ento!% le"el is ,:H of ne3t month(s sales at cost. What is the beginning in"ento!% on August 1? A) 82,@@ B) >28:@ &) 2>@@ ) 1@28@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1) B!on0o" &oman% has the following data+ *onth *a% Iune Iul% August

Budgeted Sales 8;2@@@ :@2@@@ :,2@@@ 8>2@@@

#he cost of goods sold e!centage is ;:H of sales and the desi!ed ending in"ento!% le"el is ,:H of ne3t month(s sales at cost. What a!e the e3ected total u!chases fo! Iune? A) 172:@@ B) 6,2:@@ &) 6,2>,: ) 8@2:@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,@) Aud!e% &oman% has the following data+ *onth *a% Iune Iul% August

Budgeted Sales 8;2@@@ :@2@@@ :,2@@@ 8>2@@@

#he cost of goods sold e!centage is ;:H of sales and the desi!ed ending in"ento!% is ,:H of ne3t month(s sales at cost. What a!e the total u!chases budgeted fo! Iul%? A) 6621:@ B) 662>@@ &) 812;@@ ) 8,2,:@ Answe!+ A iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,1) Santelle &oman% e3ects August sales to be 6@2@@@. A!o3imatel% 8@H of sales a!e cash sales. &ollection of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale and :H two months following sale. #he !emaining :H is uncollectible. 44444444 is the e3ected cash collection in August f!om August sales. A) 2@@@ B) 1,2@@@ &) ,12@@@ ) 6;2@@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,,) Coo"e! &oman% e3ects Iune sales to be 6@2@@@. -f these sales2 c!edit sales a!e e3ected to be 1,2@@@. &ollection of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale and :H two months following sale. #he !emaining :H is uncollectible. 44444444 is the e3ected cash collection in Iune f!om Iune sales. A) 2,@@ B) 182@@@ &) 172,@@ ) ,82@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,6) Bush &oman% e3ects *a% sales to be ,@2@@@. A!o3imatel% 8@H of sales a!e cash sales. &ollection of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale and :H two months following sale. #he !emaining :H is uncollectible. 44444444 is the e3ected cash collection in *a% f!om *a% sales. A) 82@@@ B) ;2@@@ &) >2@@@ ) 182@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,8) #he following sales budget has been !ea!ed+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1;72@@@ ,,:2@@@ 66@2@@@ 16:2@@@

&!edit Sales 1,62@@@ 1>@2@@@ ,1@2@@@ 1@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What a!e the estimated cash collections in ecembe!? A) 16:2@@@ B) 172@@@ &) 6,:2@@@ ) 66,2@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,:) Stic0el &oman% has the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1@@2@@@ 1,:2@@@ ,@72@@@ ;72@@@

&!edit Sales ,@@2@@@ 1@2@@@ 12@@@ 1882@@@

&ollection of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What is the e3ected balance of Accounts /ecei"able at -ctobe! 61? A) :2@@@ B) 11@2@@@ &) 11:2@@@ ) 1>@2@@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,;) Slowins0i &oman% has the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1@@2@@@ 1,:2@@@ 16@2@@@ 16:2@@@

&!edit Sales 6@@2@@@ 1>@2@@@ ,1@2@@@ 1@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What a!e the estimated cash collections in =o"embe!? A) 16@2@@@ B) 172@@@ &) 6,72@@@ ) 6672@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,7) &o!bin &oman% has !ea!ed the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 2@@@ ,,:2@@@ 61@2@@@ 82@@@

&!edit Sales ,:@2@@@ 1>@2@@@ ,1@2@@@ 17@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What is the e3ected balance in Accounts /ecei"able at =o"embe! 6@? A) 772:@@ B) 1@:2@@@ &) 1,62@@@ ) ,1@2@@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,>) oole% &oman% has !ea!ed the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1,62@@@ 18@2@@@ 1;72@@@ 1>2@@@

&!edit Sales ,1@2@@@ ,@@2@@@ ,;@2@@@ 1@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What a!e the estimated cash collections in -ctobe! f!om -ctobe! sales? A) 1,:2@@@ B) 18@2@@@ &) ,6@2@@@ ) ,8@2@@@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,) Iohn &oman% has the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1@@2@@@ 1,:2@@@ 16@2@@@ 16:2@@@

&!edit Sales ,@@2@@@ 1>@2@@@ ,1@2@@@ 1@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What is the e3ected balance in Accounts /ecei"able at ecembe! 61? A) :2@@@ B) 11;2@@@ &) 1@2@@@ ) ,1@2@@@ Answe!+ B iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


6@) /odne% &oman% has the following sales budget+ *onth Setembe! -ctobe! =o"embe! ecembe!

&ash Sales 1@@2@@@ 1,:2@@@ 16@2@@@ 16:2@@@

&!edit Sales ,:@2@@@ 1>@2@@@ ,1@2@@@ 1@2@@@

&ollections of c!edit sales a!e :@H in the month of sale2 8@H in the month following sale2 and 1@H two months following sale. =o uncollectible accounts a!e e3ected. What a!e the estimated cash collections in Setembe! f!om Setembe! sales? A) 1@@2@@@ B) ,@@2@@@ &) ,,:2@@@ ) ,:@2@@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 61) onnie &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales >@2@@@ >:2@@@ ,2@@@ 72@@@

Budgeted -e!ating E3enses

6,) At0inson &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales 7;2@@@ >:2@@@ ,2@@@ >@2@@@

Budgeted -e!ating E3enses @ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


66) Iuite! &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales 7;2@@@ >:2@@@ 1@@2@@@ 72@@@

Budgeted -e!ating E3enses @ B) 6@2@@@ &) 612@@@ ) 682@@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


68) Jenus &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il

Budgeted Sales @2@@@ >:2@@@ ,2@@@ 72@@@

Budgeted -e!ating E3enses 2,@@ B) 6@2@@@ &) 6@2;@@ ) 662;@@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6:)
Amount 82@@@ 12;>@ 1288@ ,2:;@ :H of sales

What a!e the total e3ected oe!ating e3enses fo! A!il? A) ;2,8@ B) 2;>@ &) 2;@ ) 11216@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6;)
Budgeted -e!ating E3enses Wages Ad"e!tising e!eciation /ent
Amount 82@@@ 12;>@ 1288@ ,2:;@ :H of sales

All cash e3enses a!e aid as incu!!ed. What a!e the e3ected total cash disbu!sements fo! oe!ating e3enses fo! A!il? A) ;2,8@ B) 2;>@ &) 2;@ ) 11216@ Answe!+ & iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 67)
Amount ,2@@@ 12;>@ 1288@ ,2:;@ :H of sales

Which of the following oe!ating e3enses is a noncash e3ense? A) Ad"e!tising B) /ent &)

6>) *a!0 &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @ ,72;>@


6) &h!istian &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @@ ,2@@@ 6@2:,@ ,28>@ ,72;>@

261, &) 6@2:,@ ) 62@;> Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8@) Cealing &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @@ 82@@@ 6@2:,@ 6:28>@ ,72;>@

8@ ) 17278@ Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


81) *a% &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @


8,) *a!$o!ie &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @


86) *a!ga!et &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @@ ,2@@@ 6@2:,@ ,28>@ ,72;>@

B) 1127, &) ,821, ) 6;27@8 Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


88) *a!% &oman% has the following info!mation+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted @@ ,2@@@ 6@2:,@ ,28>@ ,72;>@

A) 18278@ B) 172:@> &) ,;28> ) ,271; Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8:) 44444444 e3ense is d!i"en b% sales "olume. A) /ent B) nsu!ance &) e!eciation ) Sales commission Answe!+  iff+ 1 L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8;) #he Weh! &oman% is !ea!ing a budgeted income statement. #he dolla! amount of Wages E3ense ut on the income statement can be found on the 44444444. A) u!chases budget B) sales budget &) schedule of cash disbu!sements fo! u!chases ) oe!ating e3ense budget Answe!+  iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 87) &ash collections f!om custome!s in an% gi"en month include the cu!!ent month(s cash sales and e3ected collections on c!edit sales. Answe!+ #/E iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8>) #he fi!st ste in !ea!ing the maste! budget is the !ea!ation of the budgeted income statement. Answe!+ FALSE iff+ , L-+ 77 AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


8) #he
Budgeted Sales 1:@2@@@ 1:62@@@ 1:12@@@ ,:82:@@ ,:,2:@@

#he g!oss !ofit !ate is 8@H and the desi!ed ending in"ento!% le"el is ,@H of the ne3t month(s cost of sales. /eui!ed+ @@ @2;@@ 1:,27@@ 21,@ 6@2:8@ 6@26@@ #otal me!chandise needed 1@2,@ 1,1218@ 1>62@@@ Less+ Beginning in"ento!% 91>26;@) 91>21,@) 96@2:8@)

:@) #he *cG!aw &oman% has the following info!mation a"ailable+ *onth Iune Iul% August Setembe! -ctobe!

Budgeted Sales ;>2@@@ 7,2@@@ 782@@@ 7;2@@@ 7>2@@@

#he cost of goods sold !ate is ;:H and the desi!ed ending in"ento!% le"el is ,:H of the ne3t month(s cost of sales. /eui!ed+ @@ 8>21@@ 828@@ 2>,: ;@28:@ ;,2@7: Less+ Beginning in"ento!% 91127@@) 91,2@,:) 91,26:@) 28,: 827,: iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


:1)
Budgeted Sales >82@@@ 1@@2@@@ ,2@@@ 11@2@@@ @2@@@

&!edit sales a!e >@H of total sales. &ollections of c!edit sales a!e >@H in the month of sale2 1:H in the month afte! sale and :H a!e ne"e! collected. /eui!ed+ 28@@ ,,2@@@ &ollections of c!edit sales+ &u!!ent month ;82@@@ :>2>>@ 7@28@@ @ 1,2@@@ 112@8@ #otal collections 82@>@ >2,>@ 1@6288@ iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


:,) *a!"in &oman% has the following sales budget+ *onth Feb!ua!% *a!ch A!il

&ash Sales 182@@@ 1,2>@@ 1@2>@@

&!edit Sales 6@2@@@ 6,2@@@ ,>2@@@

&ollections of c!edit sales a!e 8@H in the month of sale2 :@H in the month afte! sale and 1@H two months afte! sale. =o uncollectible accounts a!e e3ected. /eui!ed+ @@ &!edit sales+ &u!!ent month 112,@@

:6) -lson &oman% has the following data+ *onth Ianua!% Feb!ua!% *a!ch A!il *a%

Budgeted
@H one month afte! u!chase 1@H two months afte! u!chase /eui!ed+

:8) Io!gensen &oman% has the following data+ *onth A!il *a% Iune Iul%

Budgeted Sales 1:82@@@ 1;@2@@@ 18,2@@@ 16;2@@@

Budgeted -e!ating E3enses @@ 6,2@@@ ,>28@@ Sales commission 727@@ >2@@@ 721@@ #otal disbu!sements >27@@ 1@@2,@@ :27@@ iff+ , L-+ 77 AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7.> Questions 1) Which of the following budget9s) has9ha"e) the disbu!sement fo! a lanned u!chase of euiment? A) oe!ating e3ense budget B) u!chases and cost of goods sold budget &) cash budget onl% ) cash budget and caital budget Answe!+  iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,) -n the cash budget2 how do we obtain the a"ailable cash balance? A) beginning cash balance B) minimum cash balance desi!ed &) total cash inc!ease f!om financing lus net cash !eceits and disbu!sements ) beginning cash balance minus minimum cash balance desi!ed Answe!+  iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 6) -n a cash budget2 if a"ailable cash balance lus net cash !eceits and disbu!sements is negati"e2 44444444. A) !ea%ment of loan is suggested B) !ea%ment of loan is !eui!ed &) bo!!owing is necessa!% ) bo!!owing is not necessa!% Answe!+ & iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 8) When !ea!ing a budgeted balance sheet2 the balance fo! the in"ento!% account is found on the 44444444. A) sales budget B) cash budget &) oe!ating e3ense budget ) u!chases and cost of goods sold budget Answe!+  iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


:) When !ea!ing a budgeted balance sheet2 the balance in the cash account is found on the 44444444. A) sales budget B) cash budget &) oe!ating e3ense budget ) caital budget Answe!+ B iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ;) When !ea!ing a budgeted balance sheet2 the balance in the euiment account is de!i"ed f!om info!mation in the 44444444. A) oe!ating e3ense budget B) caital budget &) u!chases and cost of goods sold budget ) schedule of cash disbu!sements fo! oe!ating e3enses Answe!+ B iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 7) #he financial budget is used b% manage!s to 44444444. A) manage financial affai!s B) manage emlo%ee hi!ing atte!ns &) manage the cash balance ) lan fo! futu!e stoc0 di"idends Answe!+ & iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget >) #he total amount of cash collections f!om custome!s b% month aea!s on the 44444444. A) sales budget B) oe!ating e3ense budget &) cash budget ) budgeted balance sheet Answe!+ & iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ) Iensen &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ 50 Copyright © 2014 Pearson Education

&ash Balance2 *a% 612 ,@1: &ash collections f!om custome!s in Iune &ash aid fo! me!chandise in Iune
1@2@@@ 7;2@@@ 8,2@@@ 172@@@ :2@@@ ,2@@@ 62@@@

#he minimum cash balance desi!ed is 1@2@@@. What a!e the net cash !eceits and disbu!sements fo! the month of Iune? A) 72@@@ B) 1@2@@@ &) 1,2@@@ ) 172@@@ Answe!+ & iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1@) Wininge! &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ &ash Balance2 *a% 612 ,@1: &ash collections f!om custome!s in Iune &ash aid fo! me!chandise in Iune
,@2@@@ 8;2@@@ 8,2@@@ 1,2@@@ 62@@@ ,2@@@ 82@@@

#he minimum cash balance desi!ed is 1@2@@@. What is the deficienc% of cash befo!e financing at Iune 6@2 ,@1:? A) 912@@@) B) 962@@@) &) 972@@@) ) 9112@@@) Answe!+ A iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 11) Golle! &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ &ash Balance2 *a% 612 ,@1: &ash collections f!om custome!s in Iune

1@2@@@ ;;2@@@


&ash aid fo! me!chandise in Iune &ash aid fo! oe!ating e3enses in Iune
8,2@@@ 1,2@@@ 62@@@ :2@@@ :2@@@

#he minimum cash balance desi!ed is 1@2@@@. What is the cash balance on Iune 6@2 ,@1:? A) 2@@@ B) 1@2@@@ &) 112@@@ ) 12@@@ Answe!+  iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1,) &o!nish &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ &ash Balance2 *a% 612 ,@1: &ash collections f!om custome!s in Iune e!eciation e3ense in Iune &ash aid fo! euiment in Iune &ash aid fo! me!chandise in Iune &ash aid fo! oe!ating e3enses in Iune &ash di"idend aid in Iune

112@@@ 862@@@ 1@2@@@ ,@2@@@ ,@2@@@ ,@2@@@ :2@@@

#he minimum cash balance desi!ed is :2@@@. What a!e the net cash !eceits and disbu!sements fo! the month of Iune? A) 9,2@@@) B) 962@@@) &) 9,,2@@@) ) 96,2@@@) Answe!+ & iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


16) &o!nell &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ &ash Balance2 *a% 612 ,@18 &ash collections f!om custome!s in Iune &ash aid fo! land in Iune
112@@@ 862@@@ 1@2@@@ :2@@@ ,@2@@@ ,@2@@@ :2@@@

#he minimum cash balance desi!ed is :2@@@. What is the deficienc% of cash befo!e financing at Iune 6@2 ,@18? A) 9:2@@@) B) 9;2@@@) &) 9112@@@) ) 91,2@@@) Answe!+ B iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 18) Wa!bel &oman% is !ea!ing a cash budget fo! the month of Iune. #he following info!mation is a"ailable+ &ash Balance2 *a% 612 ,@1: &ash collections f!om custome!s in Iune &ash aid fo! me!chandise in Iune &ash aid fo! oe!ating e3enses in Iune
112@@@ 862@@@ ,@2@@@ ,@2@@@ :2@@@

#he minimum cash balance desi!ed is :2@@@. What is the cash balance on Iune 6@2 ,@1:? A) >2@@@ B) 2@@@ &) 1@2@@@ ) 162@@@ Answe!+ B iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1:) 44444444 usuall% !ea!e and use the oe!ating budget. 44444444 focus on the financial budget. A) Sales manage!s5 the boa!d of di!ecto!s B) &ont!olle!s and t!easu!e!s5 line oe!ating manage!s &) Line oe!ating manage!s5 cont!olle!s and t!easu!e!s ) #he audit committee5 the boa!d of di!ecto!s Answe!+ & iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1;) Budgets that focus on the budgeted cost of acti"ities !eui!ed to !oduce and sell !oducts a!e called 44444444. A) st!ategic budgets B) maste! budgets &) acti"it%based budgets ) !olling budgets Answe!+ & iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 17) #he acti"it%based budgeting s%stem emhasi'es 44444444. A) the !esou!ces needed b% a coman% B) the !ea!ation of budgets b% function &) the attainment of long!ange goals ) acti"ities and thei! consumtion of !esou!ces Answe!+  iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


1>) 44444444 models a!e mathematical models that can !eact to an% set of assumtions about sales2 costs and !oduct mi3. A) St!ategic B) Long!ange &) Financial lanning ) -e!ating budget Answe!+ & iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget 1) #he beginning a"ailable cash balance euals the beginning cash balance lus the minimum cash balance desi!ed. Answe!+ #/E iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,@) #he cash budget begins with the ending cash balance f!om the !e"ious e!iod. Answe!+ #/E iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,1) e!eciation e3ense is usuall% a disbu!sement listed on the cash budget. Answe!+ FALSE iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,,) #he following !ule alies when !ea!ing the cash budget. f a"ailable cash lus net cash !eceits and disbu!sements is negati"e2 then bo!!owing is necessa!%. Answe!+ #/E iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,6) Line oe!ating manage!s usuall% !ea!e and use the oe!ating budget. Answe!+ #/E iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,8) #he oe!ating budget is a bette! measu!e of a coman%(s longte!m e!fo!mance than the financial budget. Answe!+ #/E iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,:) Acti"it%based budgets a!e an e3amle of functional budgeting. Answe!+ FALSE iff+ , L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget ,;) Financial lanning models enable manage!s to get answe!s to DwhatifD uestions. Answe!+ #/E iff+ 1 L-+ 7> AA&SB+ /eflecti"e thin0ing s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,7) onald &oman% has the following info!mation+ &ash Balance2 *a% 61 i"idends aid in Iune &ash aid fo! oe!ating e3enses in Iune Euiment de!eciation e3ense in Iune
8:2@@@ 1,2@@@ 6;2>@@ 82:@@ ,2@@@ 2@@@ :;2,@@ 172:@@

onald &oman% wants to 0ee a minimum cash balance of 1@2@@@. Assume that bo!!owing occu!s at the beginning of the month and !ea%ments occu! at the end of the month. nte!est of 1H is aid in cash at the end of each month when debt is outstanding. Bo!!owing and !ea%ments a!e ca!!ied out in multiles of 12@@@. /eui!ed+
8:2@@@ 1@2@@@ 6:2@@@

&ash !eceits and disbu!sements+ &ollections f!om custome!s 2@@@ @@) i"idends aid 91,2@@@) AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


,>) -(B!ien &oman% has the following info!mation+ &ash Balance2 Iune 6@ i"idends aid in Iul% &ash aid fo! oe!ating e3enses in Iul% e!eciation e3ense in Iul% &ash collections on sales in Iul% *e!chandise u!chases aid in Iul%
:@2@@@ ;@2@@@ 1>:2:@@ 1,2@@@ :1@2@@@ 1>@2@@@ 82:@@

-(B!ien &oman% wants to maintain a minimum cash balance of :@2@@@. Assume that bo!!owing occu!s at the beginning of the month and !ea%ments occu! at the end of the month. nte!est of 1H e! month is aid in cash at the end of each month debt is outstanding. Bo!!owing and !ea%ment is ca!!ied out in multiles of 12@@@. /eui!ed+
:@2@@@ :@2@@@ @

&ash !eceits and disbu!sements+ &ollections f!om custome!s :1@2@@@ @2@@@) :2:@@) i"idends aid 9;@2@@@) @ Ending cash balance :@2>@ iff+ 6 L-+ 7> AA&SB+ Anal%tic s0ills Lea!ning -utcome+ iscuss basic budgeting concets and identif% and !ea!e the budgets that com!ise the maste! budget


Horngren Ima16 Tif 07 GE

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