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Exam 7: Introduction to Budgets and Preparing the Master Budget

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Question 71

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The master budgeting process summarizes the key decisions regarding all aspects of a company's value chain.

A) True
B) False

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Question 72

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San Francisco Company expects August sales to be $32,000.Approximately 40% of sales are cash sales.Collection of credit sales are 50% in the month of sale,40% in the month following sale and 5% two months following sale.The remaining 5% is uncollectible.________ is the expected cash collection in August from August sales.

A) $8,000
B) $12,000
C) $16,000
D) $22,400

E) A) and D)
F) B) and C)

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Question 73

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A(n) ________ starts with the assumption that current activities in a company will not automatically continue in the next period.

A decision made during long-range planning includes whether to delete a product from a company's product line.

The operating budget is a better measure of a company's overall performance than the financial budget.

Systematically varying budget data input to determine the effects of each change on the budget is called ________ analysis.

Important factors used to forecast sales for a company include all of the following items EXCEPT ________.

Financial planning models ________.

Misalignment between the ________ stressed in budgets and ________ used to reward employees and managers can limit the advantages of budgeting.

The activity-based budgeting system emphasizes ________.

Daily Company has the following information: Daily Company wants to keep a minimum cash balance of $10,000. Required: Prepare a cash budget for June.

Spark Company has the following data: Purchases are paid as follows: 10% in the month of purchase 80% one month after purchase 10% two months after purchase Required: Prepare a schedule of cash disbursements for purchases for March,April and May.

Budgets that focus on the budgeted cost of activities required to produce and sell products are called ________.

Falcons Company expects May sales to be $10,000.Approximately 40% of sales are cash sales.Collection of credit sales are 50% in the month of sale,40% in the month following sale and 5% two months following sale.The remaining 5% is uncollectible.________ is the expected cash collection in May from May sales.

________ detail the planned expenditures for facilities,equipment,new products and other long-term investments.

Godwin Company is preparing a cash budget for the month of June.The following information is available: The minimum cash balance desired is $10,000.What are the net cash receipts and disbursements for the month of June?

Preparing a master budget using a spreadsheet is a quick and easy task the first time it is carried out.

Financial planning models enable managers to get answers to "what-if" questions.

The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________.

The elements of a financial budget for a merchandising firm include the capital budget,the cash budget and the budgeted balance sheet.