Question 1

What is a NOT a source of growth funds?
A) new equity
B) investing more in capital assets
C) debt financing
D) profit for the year

Accepted Answer

Investing more in capital assets is not a source of growth funds but rather a use of funds. Sources of growth funds typically include new equity, debt financing, and profits retained in the business, which can then be used for various purposes including investing in capital assets.

Question 2

What does the strategic plan help managers to accomplish?
A) preparation of financial statements
B) harmonization of a business with its environment
C) formulation of schedules and regulations
D) consolidation of capital budgets

Accepted Answer

Strategic planning helps managers align the organization's functions and activities with its external environment, ensuring that the company adapts and responds effectively to changes, challenges, and opportunities.

Question 3

What does economy determine?
A) management guidelines
B) the acquisition of resources
C) the setting of priorities
D) the SWOT analysis

Accepted Answer

The economy determines the acquisition of resources as it influences how resources are allocated, distributed, and utilized within a society or organization.

Question 4

What does efficiency refer to?
A) doing things urgently
B) doing things in teams
C) doing things right
D) doing the right things

Accepted Answer

Efficiency refers to how well something is done or how well an outcome is achieved with the least waste of time and effort; hence, "doing things right" encapsulates the concept of efficiency.

Question 5

Which of the following is an effectiveness indicator?
A) telephone response time
B) cost per unit
C) return on revenue
D) number of minutes to process a document

Accepted Answer

Telephone response time is an effectiveness indicator because it measures the quality of service, reflecting how effectively a company or service responds to customer inquiries or needs.

Question 6

What business activity includes the SWOT analysis?
A) budgeting
B) financial projections
C) controlling
D) planning

Accepted Answer

SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats, is a strategic planning tool used to evaluate these four elements of a project or business venture. It is primarily associated with the planning phase of business management, where organizations aim to strategize for future growth and address potential challenges.

Question 7

Which projected financial statement should be prepared first?
A) the statement of cash flows
B) the statement of retained earnings
C) the statement of income
D) the statement of financial position

Accepted Answer

The statement of income should be prepared first because it provides the net income or loss for the period, which is needed to prepare the statement of retained earnings and the statement of cash flows.

Question 8

What is an important advantage of budgeting?
A) It determines planning guidelines.
B) It sets corporate plans.
C) It pinpoints managerial objectives.
D) It improves communication.

Accepted Answer

Budgeting improves communication by providing a clear framework for financial expectations and resource allocation, facilitating better understanding and coordination among different departments and stakeholders.

Question 9

What is an important prerequisite to the budgeting process?
A) creating projected financial statements
B) making the master budget
C) planning assumptions
D) making the sales budget

Accepted Answer

Planning assumptions are crucial as they form the foundation upon which all budgeting activities, including the creation of financial statements, master budgets, and sales budgets, are based. They outline the expected conditions and parameters that will guide the budgeting process.

Question 10

Which of the following is an operating budget?
A) the sales budget
B) the cash budget
C) the capital budget
D) the consolidated budget

Accepted Answer

The sales budget is an operating budget because it outlines expected sales revenues, which are a part of the company's day-to-day operations.

Question 11

Which department often uses flexible budgets?
A) the manufacturing department
B) the human resources department
C) the research and development department
D) the finance department

Accepted Answer

Flexible budgets are often used by the manufacturing department to adjust for changes in production levels and costs.

Question 12

Who is responsible for coordinating the operating budgets and preparing the master budget?
A) the controller
B) the operations manager
C) the treasurer
D) the systems manager

Accepted Answer

The controller is responsible for coordinating the operating budgets and preparing the master budget within an organization. This role involves overseeing the financial planning and budgeting processes, ensuring that all parts of the organization work together to create a comprehensive financial plan.

Question 13

Which of the following is NOT a key rule for sound budgeting?
A) Encourage participation.
B) Be inflexible.
C) Relate costs to benefits.
D) Link budgeting to monitoring.

Accepted Answer

Being inflexible is not a key rule for sound budgeting. Effective budgeting requires flexibility to adjust to changes and unforeseen circumstances.

Question 14

What are used to help prepare financial projections?
A) operating budgets
B) projected statements of operations
C) projected cash flow statements
D) projected statements of financial position

Accepted Answer

Operating budgets are used to help prepare financial projections as they outline expected revenues and expenses, which are essential for forecasting future financial performance.

Question 15

What is one of the benefits of incremental budgeting?
A) The previous year's figures cannot be inflated.
B) It is not difficult to relate to specific objectives.
C) The previous year's expenses will not be missed.
D) Past activities are questioned.

Accepted Answer

Incremental budgeting builds on the previous year's budget by adding or subtracting amounts to create the new budget, ensuring that no expenses from the previous year are overlooked.

Question 16

Which of the following is a projected financial statement?
A) the statement of income
B) the overhead statement
C) the capital expenditures statement
D) the sales statement

Accepted Answer

The answer of Which of the following is a projected...

Question 17

Which ratio is NOT included in the sustainable growth formula?
A) profit for the year to revenue
B) current liabilities to current assets
C) reinvested income to profit before dividends
D) total liabilities to equity

Accepted Answer

The sustainable growth formula typically includes ratios that reflect a company's ability to grow without needing to increase financial leverage. The ratio of current liabilities to current assets (B) is more related to short-term liquidity than sustainable growth.

Question 18

What element is most often used to calculate Altman's Z-score?
A) shareholders' equity
B) revenue
C) total assets
D) working capital

Accepted Answer

Altman's Z-score is a formula used to predict the likelihood of a company going bankrupt. It uses several financial ratios that are calculated from data found on a company's financial statements. Among the key elements used in the calculation, total assets (C) are crucial for multiple components of the formula, making it the most often used element in calculating Altman's Z-score.

Question 19

What determines how an organizational unit should be measured?
A) budget standards
B) performance indicators
C) output standards
D) budget indicators

Accepted Answer

Performance indicators are used to measure how well an organizational unit is achieving its goals and objectives.

Question 20

Which controls help to guide actions toward intended results?
A) concurrent controls
B) corrective controls
C) preventive controls
D) feedback controls

Accepted Answer

The answer of Which controls help to guide actions toward...

Quiz 7: Planning, Budgeting, and Controlling

What is a NOT a source of growth funds?

What does the strategic plan help managers to accomplish?

What does economy determine?

What does efficiency refer to?

Which of the following is an effectiveness indicator?

What business activity includes the SWOT analysis?

Which projected financial statement should be prepared first?

What is an important advantage of budgeting?

What is an important prerequisite to the budgeting process?

Which of the following is an operating budget?

Which department often uses flexible budgets?

Who is responsible for coordinating the operating budgets and preparing the master budget?

Which of the following is NOT a key rule for sound budgeting?

What are used to help prepare financial projections?

What is one of the benefits of incremental budgeting?

Which of the following is a projected financial statement?

Which ratio is NOT included in the sustainable growth formula?

What element is most often used to calculate Altman's Z-score?

What determines how an organizational unit should be measured?

Which controls help to guide actions toward intended results?