Question 1

Investing decisions deal with how to obtain the funds to acquire resources.

Accepted Answer

Investing decisions deal with how to allocate funds to acquire resources, not how to obtain the funds. Obtaining funds falls under financing decisions.

Question 2

Few businesses plan to fail,but many of those that don't succeed have failed to plan.

Accepted Answer

This statement is true. Planning is an important aspect of running a successful business, and failing to plan can lead to failure.

Question 3

Budgeting is most useful when it is integrated with a company's strategy.

Accepted Answer

Budgeting is a tool for planning and allocating resources in order to achieve organizational goals. When it is integrated with the company's strategy, it ensures that resources are allocated in a way that supports the achievement of strategic objectives. Without this alignment, budgeting can become disjointed and fail to effectively support the company's overall direction.

Question 4

Budgets help managers assess strategic risks and opportunities (including both environmental and social opportunities)by providing them with feedback about the likely effects of their strategies and plans.

Accepted Answer

Budgets provide managers with a concrete way to evaluate the potential outcomes of their strategic decisions and plans, which can include considering both environmental and social opportunities and risks. By understanding how their budgeted resources will be allocated and used, managers can make informed choices that align with their goals and objectives.

Question 5

Which of the following does budgeting NOT provide?

Accepted Answer

Budgeting provides a financial framework for decision making, but it does not necessarily include an ethical framework. Ethics must be considered separately in decision making.

Question 6

The master budget expresses management's ________ and financial plans for a specified period.

Accepted Answer

The answer of The master budget expresses management's ________ and...

Question 7

Budgeted financial statements are also referred to as pro forma statements.

Accepted Answer

Budgeted financial statements are projected financial statements which estimate the financial performance of a company for a future period, and are referred to as pro forma statements.

Question 8

A good budgeting system forces managers to examine the business as they plan,so they can:

Accepted Answer

By setting specific expectations against which actual results can be compared, managers can identify areas of strength and weakness, adjust their plans accordingly, and make better business decisions. The other options do not directly relate to the benefits of a good budgeting system.

Question 9

If initial budget estimates prove unacceptable,planners achieve the MOST benefit from:

Accepted Answer

The best choice when initial budget estimates prove unacceptable is to plan again in light of feedback and current conditions. This allows the planners to reassess the situation and adjust their budget accordingly to create a more workable plan. Simply deciding not to budget or using last year's budget may not address the issues that caused the initial estimates to be unacceptable. Accepting an unbalanced budget may lead to financial difficulties in the long run.

Question 10

Which of the following regarding operating budgets and financial budgets is TRUE?

Accepted Answer

Operating budgets and financial budgets are components of the master budget, which is a comprehensive financial plan for the organization. The operating budget focuses on the income-generating activities of the organization, such as sales and production, while the financial budget includes elements like the cash budget, budgeted balance sheet, and capital expenditures budget. Both are essential parts of the master budget.

Question 11

Operating decisions deal with how to best use the limited resources of an organisation.

Accepted Answer

Operating decisions involve planning and controlling the day-to-day operations of an organisation to ensure that resources such as capital, labour, and raw materials are used effectively and efficiently to meet the organisation's objectives.

Question 12

A budget:

Accepted Answer

A budget generally includes both financial and non-financial aspects of the plan, is the quantitative expression of a proposed plan of action by management, serves as a blueprint for the company to follow in an upcoming period, and is an aid to coordinate what needs to be done. Therefore, all of the options are correct.

Question 13

Long-run planning and short-run planning are best performed independently of each other.

Accepted Answer

Long-run planning and short-run planning are interconnected and should be done in coordination to ensure alignment of short-term goals with long-term objectives. Short-term plans should contribute towards achieving the long-term goals of the organization.

Question 14

Examples of non-financial budgets include all of the following EXCEPT:

Accepted Answer

Cash collections from customers is a financial budget as it pertains to the inflow of money. The other options are non-financial budgets as they deal with units and products rather than money.

Question 15

Well-managed companies usually cycle through the four budgeting steps during the course of the financial year:

Accepted Answer

Well-managed companies typically engage in a continuous budgeting process, which includes the four steps of planning, budgeting, execution, and analysis. This process is ongoing throughout the financial year, as the company adjusts its plans and budget based on changes in the market, internal factors, and other factors that may impact the business. By regularly revisiting and updating the budget, the company can ensure that it stays on track to meet its financial goals and objectives.

Question 16

Budgeting includes only the financial aspects of the plan and not any non-financial aspects such as the number of physical units manufactured.

Accepted Answer

Budgeting includes both financial and non-financial aspects such as the number of physical units manufactured, as it is important to consider production costs and sales projections in the budgeting process.

Question 17

Operating decisions PRIMARILY deal with:

Accepted Answer

Operating decisions primarily deal with the efficient use of scarce resources. These decisions involve day-to-day operations such as production, purchasing, inventory management, and personnel management. The goal is to maximize the use of resources to generate profits and create value for shareholders. Therefore, option A is the best choice.

Question 18

Financing decisions PRIMARILY deal with:

Accepted Answer

Financing decisions are concerned with how to obtain funds to acquire resources needed for the business operations. This may include deciding between debt and equity financing, issuing new shares, or obtaining loans from financial institutions.

Question 19

At the end of the financial year,managers and management accountants take into account which of the following as they begin to make plans for the next period?

Accepted Answer

All of these answers are correct. When making plans for the next period, managers and management accountants should take into account market feedback, changed conditions, and their own experiences. This will help them make informed decisions and develop effective strategies for the upcoming period.

Question 20

The master budget reflects the impact of operating decisions,but not financing decisions.

Accepted Answer

The master budget includes both operating budgets (reflecting operating decisions) and financial budgets (reflecting financing decisions), thus incorporating the impact of both types of decisions.

Quiz 11: Budgeting, Management Control and Responsibility Accounting