B2 - MCQ's

Question 1

Which Statement is used to prepare the owner’s equity section of a budgeted balance sheet?

Answer 1

The budgeted Income Statement. It produces anticipated accrual basis net income or loss and is added to beginning owner’s equity to generate the owner’s equity section of the budgeted balance sheet.

Question 2

Authoritative Standards

Answer 2

Standards Imposed by management without employee input. Management makes the decision

Question 3

Participate Standards

Answer 3

Standards developed in collaboration with employees.

Question 4

What are examples of operating/financial budgets

Answer 4

Sales, materials, labor, overhead, production, purchases, and the forecasting of cash that will be necessary to pay for them.
Capital budgets are not included.

Question 5

What is the first step of the budgeting process

Answer 5

Forecast the sales volume for the company

Question 6

What is the production budget based on?

Answer 6

It is calculated from the desired ending inventory and the sales forecast

Question 7

What is the order in which the four types of budgets are prepared?

Answer 7

Sales, production, direct materials purchases, and cash disbursements.

Question 8

What are the order of the proforma Financial Statements?

Answer 8

The Budgeted Income Statement comes before the Budgeted Balance Sheet. The Budgeted Cash Flow comes last.

Question 9

Should joint cost be included in determining whether to sell at split-off or upgrade?

Answer 9

Joint Costs should not be included in determining whether to sell at split-off or to upgrade

Question 10

Define Relevant Range

Answer 10

The range within which the relationship between a cost and its cost driver remain valid. Within this range the fixed cost will remain fixed and the variable cost per unit will not change.