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Lecture 8

ACCT 2101 Lecture Notes - Lecture 8: Budget, Indian Railways, Income Statement


Department
Accounting
Course Code
ACCT 2101
Professor
juliechenier
Lecture
8

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LearnSmart Chapter 8: Budgetary Planning
True/False
1. Budgetary slack can be sometimes beneficial: TRUE
MULTIPLE CHOICE
2. Which of the following statements is true?
Materials & labor budgets are based on the production budget
3. When preparing a raw materials purchases budget, which of the following is
needed to calculate raw materials to be purchased?
Beginning inventory of raw materials
Raw materials per unit
4. Budgets are used for two distinct purposes: ___ and ___. The first of these
purposes relates to developing and preparing various budgets, while the
second involves comparing actual results to the budget
Planning; controlling
5. Which of the following are advantages of budgeting?
Budgets provide benchmarks for evaluating performance
Budgets force managers to think about and plan for the future
Budgets promote cooperation and coordination between different
areas within an organization
The budgeting process provides lead time to solve potential
problems
6. Which of the following is needed to prepare a sales budget?
The budgeted number of units to be sold
7. The implementation or action phase of the management cycle is:
Directing/leading
8. Which of the following budgets shows the company’s planned profit?
Budgeted income statement
9. Financial budgets:
Include the capital expenditures budget
Include the cash budget
Impact the budgeted balance sheet
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LearnSmart Chapter 8: Budgetary Planning
10. Which of the following is an advantage of budgeting?
Budgets communicate management’s plan throughout the
organization
11. Which of the following involves identifying resources and expenditures that
will be required over limited time (typically a year)?
Budgeting
12. A continuous or rolling budget:
Helps avoid games at the end of the budget period
Keeps managers in continuous planning mode
Adds one period to the end of the budget as each period comes
to a close
13. On the production budget, what is added to budgeted unit sales on a
production budget to obtain the total number of units to be produced?
Budgeted ending inventory
14. To calculate the direct labor requirement for each quarter:
Multiply the number od direct labor hours per unit times the
number of units to be produced
15. Madison Corporation’s expected beginning cash balance is $35,000. Cash
collections are budgeted at $50,000 and cash disbursements are estimated to
be $80,000. The minimum required cash balance is $20,000 and the
company can borrow as much as needed in increments of $10,000. Calculate
the expected ending cash balance for the month
$25,000 ($35,000+$50,000-$80,000=$5,000. Since they can borrow in
increments of $10,000, they must borrow $20,000 to meet or exceed
the minimum cash balance making the ending balance $25,000)
16. Short-term objectives
Need to be achieved in one year or less
Are an important component of long-term objectives
17. When an organization uses a top-down approach to budgeting:
Top management sets the budget
The budget is imposed on lower-levels of the organization
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