Financial Planning Tools and Concepts

The strategic plan is management's vision of what they desire the organization to achieve over the long term.

• True 

• False

An advantage of budgeting is that it requires managers to evaluate why things did not progress according to the plan.

• True

• False

Participative budgeting allows employees throughout the organization to have input into the budget-setting process.

• True

• False

Budgets that are tight but attainable are less likely to motivate people than budgets that are easy to achieve.

• True

• False

Operating budgets focus on the financial resources needed to support operations.

• True

• False

The direct labor budget is based on the budgeted sales levels.

• True

• False

Budgeted manufacturing overhead includes indirect manufacturing costs, but not selling and administrative costs.

• True

• False

Merchandising companies prepare the production budget after preparing the sales budget.

• True

• False

Budget preparation is best determined in a top-down managerial approach.

• True

• False

A master budget consists of

• an interrelated long-term plan and operating budgets.

• financial budgets and a long-term plan.

• interrelated financial budgets and operating budgets.

• all the accounting journals and ledgers used by a company.