Chapter14 Flashcards
Which of the following involves making long-term decisions such as defining the scope of the business?
Strategic planning
Which of the following focuses on intermediate range planning?
Capital budgeting
Budgets help with planning, coordination, and performance evaluation, but not corrective action.
False
A technique that invites personnel at all levels of the organization to contribute to the budget process is called Blank______ budgeting.
participative
Long term decision:
defining the scope of the business
determining which products to develop or discontinue
identifying the most profitable market niche
The Sales forecast
generally includes economic analysis
may use statistical techniques
may use data regarding changes in competition
Capital budgeting focuses on Blank______ range planning.
intermediate
Assume Durango Co. has cash sales of $80,000 and sales on account of $120,000 for the month of November. The company expects sales to grow 10% a month. Projected December sales equal
$200,000 × 110% = $220,000
Budgeting
improves coordination across departments
provides advance notice of potential problems
allows for better planning
assists in performance evaluation
Where does a company record its current cash sales and collections of accounts receivable?
Schedule of cash receipts
Participative budgeting is a process where
employees at all levels are involved in the budget process
Durango Co. maintains an ending inventory equal to 20% of next month’s cost of budgeted sales. Budgeted cost of sales are $100,000 for October and $200,000 for November. Required purchases for the month of October equal
Desired ending inventory for October + Budgeted sales for October - Beginning inventory for October = ($200,000 × 20% + $100,000 - $100,000 × 20%) = $120,000
