Budgeting

Question 1

Is depreciation a cash mvmt?

Answer 1

No, remove

Question 2

What is an example of a principal budget factor?

Answer 2

A factor which limits the activities of an undertaking

Question 3

For a company that does not have any production resource limitations, what is the correct sequence for budget preparation?

Answer 3

Sales budget, finished goods inventory budget, production budget, then materials usage budget

Question 4

What is true of the master budget?

Answer 4

• will include a budgeted balance sheet and a budgeted income statement prepared on the
  accruals basis
• Will include a cash budget

Question 5

What is the formula for production units?

Answer 5

Closing inventory + sales – opening inventory

Question 6

When preparing a material purchases budget, what determines the quantity to be purchased?

Answer 6

Materials required for production – opening inventory of materials + closing inventory of
materials

Question 7

What can be inferred from the statement, The quantity of material in the material purchases budget is greater than the quantity of material in
the material usage budget.

Answer 7

Raw materials inventories are budgeted to increase.

Question 8

How is a month end payables balance calculated?

Answer 8

That month’ s purchases + previous month’s purchases

Question 9

When must a budget be quantified?

Answer 9

If it is to be useful for planning and control purposes.

Question 10

What does an organisation’s long term plan provide?

Answer 10

The framework within which an annual budget is set.

Question 11

What are 2 underlying assumptions of forecasts made using regression analysis?

Answer 11

• The value of one variable can be predicted or estimated from the value of one other variable
• What has happened in the past will provide a reliable guide to the future

Question 12

What is the coefficient of determination?

Answer 12

r^2

Question 13

What does the coefficient of determination measure?

Answer 13

The proportion of the total variation in the value of one variable that can be explained by variations in the value of the other variable.

Question 14

What values must the coefficient determination always fall between?

Answer 14

0 and 1

Question 15

What values must the correlation coefficient always fall between?

Answer 15

-1 and 1

Question 16

What is a top-down budgeting process?

Answer 16

Top management prepare a budget with little or no input from operating personnel

Question 17

What are 2 advantages of bottom-up budgeting?

Answer 17

• Increase operational managers’ commitment to organisational objectives
• Based on information from employees most familiar with day to day activities

Question 18

What is incremental budgeting?

Answer 18

The budget for each period is based on the current year’s results, modified for changes in activity levels.

Question 19

What is the high-low method useful for?

Answer 19

Calculating the budgeted cost for the actual activity

Question 20

What is the reason for seasonally adjusting the data in a time series?

Answer 20

To find the trend

Question 21

What can help reduce data bias in an AI system?

Answer 21

• Using training data from all areas of the country
• Monitoring performance of the system against real data

Question 22

Can graphs be manipulated to introduce bias?

Answer 22

Yes

Question 23

What is the formula for budgeted inventory purchases?

Answer 23

COS + change in inventory

Question 24

Is a general provision a cash mvmt?

Answer 24

No so 0s or remove

Question 25

Is the re-evaluation of an asset a cash mvmt?

Answer 25

No so 0s