Budget Quiz

What is the main purpose of a budget in an organization?

• To increase sales

• To control costs

• To achieve financial and operational goals

• To reduce employee turnover

Which condition can lead to cash shortages even when profits are high?

• Low sales

• High operating cycles

• Low inventory

• High employee turnover

What was the average operating cycle of NTI during 2020?

• 30 days

• 81 days

• 166 days

• 247 days

What is the first step in preparing a master budget?

• Prepare a sales forecast

• Prepare a cash budget

• Prepare a budgeted balance sheet

• Prepare an income statement

Which of the following is NOT a benefit of budgeting?

• Coordination of activities

• Improved performance evaluation

• Enhanced employee turnover

• Assignment of decision-making responsibilities

What approach is currently the more widely used budgeting philosophy?

• Behavioral approach

• Total quality management approach

• Incremental approach

• Zero-based budgeting approach

What is one of the steps in the budget process that directly impacts NTI’s cash flow?

• Increasing production

• Setting sales prices

• Preparing a sales forecast

• Liquidating finished goods inventory

What financial document summarizes the cash payments required to service NTI’s debt each quarter?

• Income statement

• Cash budget

• Debt service budget

• Balance sheet

Which of the following is included in NTI's master budget?

• Sales budget

• Production budget

• Cash budget

• All of the above

What is a flexible budget?

• A budget that changes with seasonal sales

• A budget that remains constant

• A budget that adjusts for different levels of activity

• A budget that includes only variable costs