Managerial Accounting

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

• True

• False

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

• True

• False

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

• True

• False

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

• True

• False

Budgets can play both planning and control roles for management.

• True

• False

Budgeting is used to help companies:

• plan to better satisfy customers

• anticipate potential problems

• focus on opportunities

• All of these answers are correct.

Budgeting provides all of the following EXCEPT:

• a means to communicate the organization's short-term goals to its members

• support for the management functions of planning and coordination

• a means to anticipate problems

• an ethical framework for decision making

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

• planning again in light of feedback and current conditions

• deciding not to budget this year

• accepting an unbalanced budget

• using last year’s budget

Operating budgets and financial budgets:

• combined form the master budget

• are prepared before the master budget

• are prepared after the master budget

• have nothing to do with the master budget

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

• detect inaccurate historical records

• set specific expectations against which actual results can be compared

• complete the budgeting task on time

• get promoted for doing a good job