Question 1

Which of the following items is not needed to prepare a sales budget by product line?

Accepted Answer

A)   Expected purchase price of each product.
B)   Expected unit sales of each product.
C)   Expected selling price of each product.
D)   All of the answers are correct.E) B) and C)
F) All of the above

Question 2

The first budget prepared in a master budget is the cash receipts budget.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following accounts would appear on the inventory purchases budget and pro forma balance sheet?

Accepted Answer

A)   Cost of goods sold
B)   Sales revenue
C)   Accounts receivable
D)   Accounts payableE) B) and C)
F) C) and D)

Question 4

The budgeting process formalizes and documents managerial plans to clearly communicate objectives to both superiors and subordinates. This budgeting requirement is an example of:

Accepted Answer

A)   performance measurement.
B)   planning.
C)   budget coordination.
D)   taking corrective action.E) B) and D)
F) All of the above

Question 5

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000. What were the total payments on account?

Accepted Answer

A)   $450,000
B)   $395,000
C)   $535,000
D)   $465,000E) A) and C)
F) C) and D)

Question 6

The three major components of the master budget are the financial budgets, the capital budgets, and the pro forma financial statements.

Accepted Answer

A) True 
 B)False

Question 7

What is the total amount of S&A expenses for the fourth quarter that the company will report on its pro forma income statement?

Accepted Answer

A)   $64,400
B)   $68,900
C)   $23,700
D)   $63,900E) A) and D)
F) All of the above

Question 8

Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?

Accepted Answer

A)   Cash receipts schedule
B)   Cash payments schedule
C)   Inventory purchases budget
D)   Sales budgetE) B) and C)
F) A) and B)

Question 9

Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?

Accepted Answer

A)   52,000 units
B)   54,000 units
C)   62,000 units
D)   None of the choices is correct.E) A) and B)
F) None of the above

Question 10

Select the correct statement regarding the selling and administrative (S&A)  expense budget.

Accepted Answer

A)   The S&A budget is prepared after the sales budget.
B)   The S&A budget is prepared before the cash budget.
C)   The S&A budget is prepared before the pro forma income statement.
D)   All of the answers are correct.E) A) and B)
F) All of the above

Question 11

A company's numerous specific budgets (sales, inventory purchases, etc.)  together are referred to as the:

Accepted Answer

A)   grand plan.
B)   strategic plan.
C)   current budget.
D)   master budget.E) A) and D)
F) A) and C)

Question 12

Which of the following would not be included in a selling and administrative expenses budget?

Accepted Answer

A)   Budgeted salary expenses
B)   Budgeted rent expense
C)   Cash payments for selling and administrative expenses
D)   Budgeted interest expenseE) A) and B)
F) A) and C)

Question 13

Which of the following is a benefit associated with budgeting?

Accepted Answer

A)   Promotes planning and coordination
B)   The ability to take corrective action to improve performance
C)   Enhances performance measurement
D)   All of the answers are correctE) A) and C)
F) A) and D)

Question 14

What is the amount of sales commissions payable that the company will report on its pro forma balance sheet at the end of the fourth quarter?

Accepted Answer

A)   $5,500
B)   $5,000
C)   $5,300
D)   $11,000E) B) and C)
F) B) and D)

Question 15

Which section is not included on the cash budget?

Accepted Answer

A)   Investing
B)   Cash payments
C)   Cash receipts
D)   FinancingE) All of the above
F) A) and B)

Question 16

O'Hare Company is in the process of preparing a purchases budget for the first quarter of Year 2. The company has budgeted sales as follows:  Cost of goods sold is expected to be 75% of sales. The company would like to have ending inventory each month equal to 25% of the following month's predicted cost of sales. The total cost of purchases in January Year 2 is:

Accepted Answer

A)   $35,719.
B)   $46,500.
C)   $44,438.
D)   $59,250.E) C) and D)
F) B) and D)

Question 17

Bright Minds Toy Company prepared the following sales budget for the second quarter. Projected sales for each of the first three months of operations are as follows:  Bright Minds expects to collect 70% of the sales on account in the month of sale, and 20% in the month following the sale, and the remainder in the second month following the sale.
What is the amount of budgeted cash collections for June?

Accepted Answer

A)   $406,900
B)   $461,900
C)   $460,000
D)   $424,900E) C) and D)
F) A) and B)

Question 18

Oakton Furniture provided the following information relevant to its sales for December Year 1 and the first quarter of Year 2:  Based on the company's collection history, 42% of credit sales are collected in month of sale and the remainder is collected in the following month. Total budgeted cash receipts in February are expected to be:

Accepted Answer

A)   $60,000.
B)   $162,400.
C)   $352,600.
D)   $228,000.E) A) and D)
F) A) and B)

Question 19

Pro forma financial statements are financial statements that are prepared based on budgeted future amounts.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is incorrect?

Accepted Answer

A)   Capital budgeting affects the master budget because it considers what assets a company should have and use when achieving its budgets.
B)   Capital budgeting involves decisions as whether to buy or lease equipment.
C)   Capital budgeting focuses on short-term planning.
D)   Cash outflows for capital budgeting will appear on the cash budget.E) None of the above
F) A) and B)

Exam 14: Planning for Profit and Cost Control

Correct Answer
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The first budget prepared in a master budget is the cash receipts budget.

Correct Answer
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What is the amount of sales commissions payable that the company will report on its pro forma balance sheet at the end of the fourth quarter?

Correct Answer
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The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000. What were the total payments on account?

Correct Answer
verified

What is the total amount of S&A expenses for the fourth quarter that the company will report on its pro forma income statement?

Correct Answer
verified

Which of the following items is not needed to prepare a sales budget by product line?

Correct Answer
verified

Which of the following would not be included in a selling and administrative expenses budget?

Correct Answer
verified

Pro forma financial statements are financial statements that are prepared based on budgeted future amounts.

Correct Answer
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Which of the following is a benefit associated with budgeting?

Correct Answer
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Which of the following statements is incorrect?

Correct Answer
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The budgeting process formalizes and documents managerial plans to clearly communicate objectives to both superiors and subordinates. This budgeting requirement is an example of:

Correct Answer
verified

Correct Answer
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Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?

Correct Answer
verified

Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?

Correct Answer
verified

Select the correct statement regarding the selling and administrative (S&A) expense budget.

Correct Answer
verified

Which section is not included on the cash budget?

Correct Answer
verified

A company's numerous specific budgets (sales, inventory purchases, etc.) together are referred to as the:

Correct Answer
verified

The three major components of the master budget are the financial budgets, the capital budgets, and the pro forma financial statements.

Correct Answer
verified

Which of the following accounts would appear on the inventory purchases budget and pro forma balance sheet?

Correct Answer
verified

Correct Answer
verified

Exam 14: Planning for Profit and Cost Control

Correct AnswerverifiedShow Answer

The first budget prepared in a master budget is the cash receipts budget.

Correct AnswerverifiedShow Answer

What is the amount of sales commissions payable that the company will report on its pro forma balance sheet at the end of the fourth quarter?

Correct AnswerverifiedShow Answer

The accounts payable balance at the beginning of the year was $85,000. The company purchased $380,000 worth of goods on account, and the ending balance of the payables account was $70,000. What were the total payments on account?

Correct AnswerverifiedShow Answer

What is the total amount of S&A expenses for the fourth quarter that the company will report on its pro forma income statement?

Correct AnswerverifiedShow Answer

Which of the following items is not needed to prepare a sales budget by product line?

Correct AnswerverifiedShow Answer

Which of the following would not be included in a selling and administrative expenses budget?

Correct AnswerverifiedShow Answer

Pro forma financial statements are financial statements that are prepared based on budgeted future amounts.

Correct AnswerverifiedShow Answer

Which of the following is a benefit associated with budgeting?

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

The budgeting process formalizes and documents managerial plans to clearly communicate objectives to both superiors and subordinates. This budgeting requirement is an example of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?

Correct AnswerverifiedShow Answer

Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?

Correct AnswerverifiedShow Answer

Select the correct statement regarding the selling and administrative (S&A) expense budget.

Correct AnswerverifiedShow Answer

Which section is not included on the cash budget?

Correct AnswerverifiedShow Answer

A company's numerous specific budgets (sales, inventory purchases, etc.) together are referred to as the:

Correct AnswerverifiedShow Answer

The three major components of the master budget are the financial budgets, the capital budgets, and the pro forma financial statements.

Correct AnswerverifiedShow Answer

Which of the following accounts would appear on the inventory purchases budget and pro forma balance sheet?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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