CHAPTER 6 QB

1. Which of the following is NOT considered to be an objective of budgeting?

 

A. Authorization

 

A. Activities Coordination

 

A. Expansion

 

A. Resources allocation

• A

• B

• C

• D

2. Which of the following is NOT one of the main purposes of a budget?

 

A. To compel planning

 

A. To inform shareholders of performance

 

A. To communicate ideas and plans

 

A. To provide a framework for responsibility accounting

• A

• B

• C

• D

3. Which of the following statements relating to budgets is correct?

 

A. A budget covers period longer than one year and is used for strategic planning

 

A. A budget manual will contain instructions governing the preparation of budgets

 

A. A budget is usually prepared by the shareholders of a company

 

A. The budget committee is responsible for the preparation of functional budgets

 

• A

• B

• C

• D

4. Which of the following is NOT considered to be a function of the budget committee?

 

A. Preparing functional budgets

 

A Timetabling

 

A. Issuing the budget mannal

 

A. Monitoring the budgeting process

• A

• B

• C

• D

5. When preparing a produ Son budget, what does the quantity to be produced equal?

A Sale quantity + opening inventory of finished goods + closing inventory of finished goods

A. sales quantity – opening inventory of FGs + closing inventory of FGs

A. Sales quantity - opening inventory of FGs - closing inventory of FGs

A.A Sales quantity + opening inventory of FGs - closing inventory of FGs

• A

• B

• C

• D

8. Which of the following is NOT a functional budget?

 

A. Production budget

 

A Distribution cost budget

 

A. Selling cost budget

 

A. Cash budget

 

• A

• B

• C

• D

9. Which of the following is a principal budget factor?

 

A. The lughest value item of cost

 

B. A factor which limits an organization's performance

 

C A factor common to all budget çenlers

 

D. A factor controllable by the manager of the best center

• A

• B

• C

• D

10. The following details have been extracted from the receivables collection records of MidoCO

Invesces paid in the month after sale 60%

Invoices paid in the second month after sale: 25%

 Invoice paid in the third month after sale: 12%

Bad debts 3%

Invoices are issued on the last day of each month

Customers paying in the month after sale are entitled to deduct a 2% settlement discount

Credit sales values for August to November arm budgeted as follows:

August

September

October

November

$35,00

$40,000

$60,000

$45,000

 

What is the amount budgeted to be received from credit sales in November?

 

A. 46,260

 

A. 49,480

 

A 50,200

A. 50,530

• A

• B

• C

• S

11. The following details have been extracted from the payables records of Dimo Co:

Invoices paid in the month of purchase: 25%

Invoices paid in the first month after purchase 70% Invoices paid in the second month after purchase: 5%

Purchases for September to November are budgeted as follows

September: $250,000

October: $300,000

For suppliers paid in the month of purchase, a settlement discount of 5% is received. What is the amount budgeted to be paid to suppliers in November?

A. $278,500

 

A. $280,000

 

A. $289,000

 

A.   $292,500

• A

• B

• C

• D

12. What does a master budget comprise?

 

A. The budgeted statement of profit or loss

 

A. The budgeted cash flow, budgeted statement of profit or loss and budgeted statement of financial position

A. The budgeted cash flow

 

A. The entire set of budgets prepared

• A

• B

• C

• D