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Managerial Accounting > Chapter 8: Master Budgeting > Flashcards

Chapter 8: Master Budgeting Flashcards

1
Q

is a detailed plan for the future that is usually expressed in formal quantitative terms.

A

Budget

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2
Q

involves developing goals and preparing various budgets to achieve those goals.

A

Planning

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3
Q

involves gathering feedback to ensure that the plan is being properly executed or modified as cir-
cumstances change.

A

Control

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4
Q

(6) Advantages of Budgeting

A
  1. communicate
  2. think about and plan
  3. allocating resources
  4. bottlenecks
  5. coordinate
  6. benchmarks
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5
Q

is that a manager should be held responsible for those items—and only those items—that the
manager can actually control to a significant extent.

A

Responsibility Accounting

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6
Q

is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed.

A

continuous or perpetual
budget

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7
Q

budget is a budget that is prepared with the full cooperation and participation of managers at all levels.

A

self-imposed budget or participative budget

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8
Q
  1. Which of the following statements is false? (You may select more than one answer.)

a. Control involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.

b. Responsibility accounting is based on the belief that all managers should be held accountable for achieving the company’s overall goals, even if this requires holding some managers responsible for items that are beyond their control.

c. A self-imposed budget is prepared with the full cooperation and participation of managers at all levels of the organization.

d. One limitation of self-imposed budgets is that lower-level managers may allow too much budgetary slack.

A

B.

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9
Q

enables organizations to react quickly to deviations from their plans and to learn from feedback

A

Respinsiblity Accounting

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10
Q

consists of a number of separate but
interdependent budgets that formally lay out the company’s sales, production, and financial goals.

A

Master Budget

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11
Q

which is a detailed
schedule showing the expected sales for the budget period.

A

Sales Budget

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12
Q

10 schedules contained in the Master Budget

A
  1. Sales Budget
  2. Production Budget
  3. Ending Inventory Budget
  4. Selling & Administrative Expense Budget
  5. Direct Materials Budget
  6. Direct Labor Budget
  7. Manufacturing Overhead Budget
  8. Cash Budget
  9. Budgeted Income Statement
  10. Budgeted Balance Sheet
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13
Q

is a detailed plan showing how cash
resources will be acquired and used.

A

Cash Budget

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14
Q

If it were a merchandising company, instead it would prepare a ________________- showing the amount of goods to be purchased from suppliers during the period.

A

merchandise purchases
budget

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15
Q
  1. If a company has a beginning merchandise inventory of $50,000, a desired ending merchandise inventory of $30,000, and a budgeted cost of goods sold of $300,000, what is the amount of required inventory purchases?

a. $320,000
b. $280,000
c. $380,000
d. $300,000

A

B

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16
Q
  1. Budgeted unit sales for March, April, and May are 75,000, 80,000, and 90,000 units. Management desires to maintain an ending inventory equal to 30% of the next month’s unit sales. How many units should be produced in April?

a. 80,000 units
b. 83,000 units
c. 77,000 units
d. 85,000 units

A

B.

17
Q
  1. March, April, and May sales are $100,000, $120,000, and $125,000, respectively. A total of 80% of all sales are credit sales and 20% are cash sales. A total of 60% of credit sales are collected in the month of the sale and 40% are collected in the next month. There are no bad debt expenses. What is the amount of cash collections
    for April?

a. $89,600
b. $111,600
c. $113,600
d. $132,600

A

C.

18
Q
  1. Referring to the facts in question 2 above, what is the accounts receivable balance at the end of May?

a. $40,000
b. $50,000
c. $72,000
d. $80,000

A

A.

19
Q

This computation was needed for two reasons: first, to help determine cost of goods sold on the budgeted income statement; and second, to value ending inventories on the budgeted balance sheet.

A

Ending Inventory Budget

20
Q

lists the budgeted expenses for areas other than manufacturing. In large organizations, this budget would be a compilation of many smaller, individual budgets submitted by department heads and other persons responsible for selling and administrative expenses.

A

Selling & Administrative Expenses Budget

21
Q
  1. Which of the following statements is true? (You may select more than one answer.)

a. The manufacturing overhead budget includes depreciation related to assets that support a company’s selling and administrative functions.

b. The cash disbursements for selling and administrative expenses are reported in the budgeted income statement.

c. The selling and administrative expense budget includes depreciation related to manufacturing assets.

d. The total variable and fixed selling and administrative expenses incurred during a period are reported in the budgeted income statement.

A

D.

22
Q

The cash budget is composed of four main sections:

A
  1. The cash receipts section.
  2. The cash disbursements section.
  3. The cash excess or deficiency section.
  4. The financing section.
23
Q

A detailed plan for the future that is usually expressed in formal quantitative terms.

A

BUDGET

24
Q

A detailed schedule showing expected sales expressed in both dollars and units.

A

SALES BUDGET

25
Q

A detailed schedule of planned expenses that will be
incurred in areas other than manufacturing during a budget period.

A

SELLING & ADMINISTRATIVE EXPENSE BUDGET

26
Q

A method of preparing budgets in which managers prepare their own budgets.

These budgets are then reviewed by higher-level managers, and any issues are resolved by mutual
agreement.

A

SELF-IMPOSED BUDGET

27
Q

A detailed plan that shows the direct labor-hours required to fulfill the production budget.

A

Direct Labor Budget

28
Q

The process of establishing goals and specifying how to achieve them.

A

Planning

29
Q

A budget showing the dollar amount of unsold finished goods
inventory that will appear on the ending balance sheet.

A

Ending Finished Goods Inventory

30
Q

A 12-month budget that rolls forward one month as the current month is completed.

A

Continuous budget

31
Q

A number of separate but interdependent budgets that formally lay out the company’s
sales, production, and financial goals and that culminates in a cash budget, budgeted income statement,
and budgeted balance sheet.

A

Master Budget

32
Q

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control.

The managers are held responsible for differences between budgeted and actual results.

A

Responsibility Accounting

33
Q

A detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs.

A

Production Budget

34
Q

A detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

A

Direct Materials Budget

35
Q

A detailed plan showing the production costs, other than direct
materials and direct labor, that will be incurred over a specified time period.

A

manufacturing Overhead Budget

36
Q

The process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change.

A

Control

37
Q

A detailed plan used by a merchandising company that shows the amount of goods that must be purchased from suppliers during the period.

A

Merchandise Purchases Budget

38
Q

A detailed plan showing how cash resources will be acquired and used over a specific time
period.

A

Cash Budget

Managerial Accounting (10 decks)

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