Question 1

Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known.

Accepted Answer

Sales forecasts are usually drawn up before the cash budget, as they help determine the expected revenues that will impact the cash inflows. The cash budget is prepared based on the sales forecast, as they provide an estimate of the amount of funds needed for marketing, production, and other expenses.

Question 2

Both planning and control are needed for an effective budgeting system.

Accepted Answer

Planning sets the goals and objectives, while control ensures that the actual results remain in line with the set goals. Both are essential components in an effective budgeting system. Without proper planning, the budget may not reflect the company's goals and objectives, and without control, the budget may not be followed, and the company may overspend.

Question 3

Which of the following is not correct regarding the manufacturing overhead budget?

Accepted Answer

The total budgeted cash disbursements for manufacturing overhead is not necessarily equal to the total of budgeted variable and fixed manufacturing overhead, as some overhead costs may be non-cash expenses such as depreciation.

Question 4

Planning and control are essentially the same thing.

Accepted Answer

Planning involves setting goals, analyzing resources and determining actions needed to achieve those goals, while control involves monitoring progress and making necessary adjustments to ensure that goals are being met. They are distinct but complementary processes.

Question 5

Which of the following statements is not correct?

Accepted Answer

The statement in option D is not correct. The sales budget is usually prepared before the cash budget as it helps in estimating the expected cash collections for the forthcoming period. Hence, option D is the correct answer.

Question 6

Budgeted production needs are determined by:

Accepted Answer

The answer of Budgeted production needs are determined by:
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Question 7

The production budget is typically prepared prior to the sales budget.

Accepted Answer

The sales budget is typically prepared prior to the production budget.

Question 8

A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product.

Accepted Answer

A sales budget is a detailed schedule that shows the expected sales in dollars and units of product.

Question 9

The master budget is a network consisting of many separate budgets that are interdependent.

Accepted Answer

The master budget is a comprehensive financial plan that incorporates many individual budgets such as the sales budget, production budget, cash budget, etc. These budgets are interdependent and their results have an impact on each other. The master budget serves as a guideline for overall financial decision-making in an organization.

Question 10

Which of the following is not a benefit of budgeting?

Accepted Answer

Budgeting actually increases the need for tracking actual cost activity, as it provides a baseline for comparison. A budget serves as a plan for future actions, but it is not a substitute for actually tracking and managing costs. Therefore, A is not a benefit of budgeting.

Question 11

The budgeted amount of raw materials to be purchased is determined by:

Accepted Answer

The answer of The budgeted amount of raw materials to...

Question 12

Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget.

Accepted Answer

The manufacturing overhead budget includes both variable and fixed manufacturing overhead costs as they are part of the overall costs incurred during the production process.

Question 13

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

Accepted Answer

The answer of Which of the following represents the correct...

Question 14

Self-imposed budgets typically are:

Accepted Answer

The answer of Self-imposed budgets typically are:
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Question 15

One difficulty with self-imposed budgets is that they are not subject to any type of review.

Accepted Answer

The answer of One difficulty with self-imposed budgets is that...

Question 16

In the selling and administrative budget, the non-cash charges (such as depreciation) are added to the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses.

Accepted Answer

Non-cash charges are not added to the total budgeted selling and administrative expenses to determine expected cash disbursements. They are excluded from cash disbursement calculations as they do not represent an actual outflow of cash.

Question 17

A continuous (or perpetual) budget:

Accepted Answer

The answer of A continuous (or perpetual) budget:
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Question 18

Which of the following represents the normal sequence in which the indicated budgets are prepared?

Accepted Answer

The answer of Which of the following represents the normal...

Question 19

National Telephone company has been forced by competition to put much more emphasis on planning and controlling its costs. Accordingly, the company's controller has suggested initiating a formal budgeting process. Which of the following steps will NOT help the company gain maximum acceptance by employees of the proposed budgeting system?

Accepted Answer

Implementing the change quickly may cause resistance from employees who feel that they were not properly informed or prepared for the change. It is important to communicate the purpose and benefits of the budgeting system to employees and allow time for them to adjust to the new process.

Question 20

One benefit of budgeting is that it coordinates the activities of the entire organization.

Accepted Answer

Budgeting ensures that all departments and individuals are working towards the same financial goals and objectives, allowing for better coordination and alignment throughout the organization.

Quiz 10: Profit Planning