ACC240 Week 6

Which one of the following is not a benefit of budgeting?

• It facilitates the coordination of activities.

• It requires all levels of managmeent to plan ahead on a recurring basis.

• It provides assurance that the company will achieve its objectives.

• It provides definite objectives for evaluating performance.

The single most important output in preparing financial budgets is the

• budgeted income statement.

• cash budget.

• sales forecast.

• determination of the unit cost of the product.

If budgets are to be effective, there must be

• independent verification of budget goals.

• a history of successful operations.

• excess plant capacity.

• an organizational structure with clearly defined lines of authority and responsibility.

The most common budget period is

• six months

• one year

• three months

• one month

Long-range planning

• generally encompasses a longer period of time than an annual budget.

• is usually more accurate than an annual budget.

• generally presents more detailed information than an annual budget.

• is prepared on a quarterly basis if the budget is prepared on a quarterly basis.

In a production budget, total required production units are the budgeted sales units plus

• desired ending finished goods units.

• desired ending finished goods units plus beginning finished goods units.

• beginning finished goods units.

• desired ending finished goods units minus beginning finished goods units.

What is the proper preparation sequencing of the following budgets?

1. Budgeted Balance Sheet

2. Sales Budget

3. Selling and Administrative Budget

4. Budgeted Income Statement

• 1, 2, 3, 4

• 2,3,1,4

• 2,4,1,3

• 2,3,4,1

The comparison of differences between actual and planned results

• is usually done orally in department meetings.

• is done by the external auditors.

• appears on periodic budget reports.

• appears on the company's external financial statements.

Which budgeted amounts appear on the flexible budget?

• Original budgeted amounts at the static budget activity level.

• Budgeted amounts for the actual activity level achieved.

• Actual costs for the budgeted estimated activity level.

• Actual costs for the estimated activity level.

Under management by exception, which differences between planned and actual results should be investigated?

• All differences should be investigated.

• Controllable and uncontrollable.

• Material and controllable.

• Material and noncontrollable.