Finances

Question 1

An essential element of management planning and control

Answer 1

A budget

Question 2

Three purposes of budgeting:
1)
2)
3)

Answer 2

1) Estimate the costs and expected revenues of planned activities
2) Provide a warning mechanism when variances occur in actual numbers
3) Exercise uniformity in fiscal control

Question 3

If the contribution of an operating function cannot be quantified or cannot be shown to result in greater net revenue, it is an axiom of sound management that the function be:

Answer 3

reduced or eliminated

Question 4

Requires that the benefits from an activity be weighed against the benefits to be lost if the planned activity is carried out at a lesser level or not at all.

Answer 4

Zero based budgeting

Question 5

Each period’s budget begins by using the last period as a reference point

Answer 5

Incremental budget

Question 6

Budgets initiated, controlled, and directed by top activities performed and services employed

Answer 6

Top-down vs. Bottom-up budgeting

Question 7

Allocates costs for producing a good or service on the basis of the activities performed and services employed

Answer 7

Activity-based budgeting

Question 8

Projects future sales

Answer 8

Revenue budget

Question 9

Lists primary activities undertaken by a unit and allocates a value to each

Answer 9

Expense budget

Question 10

Forecasts how much cash is on hand and how much is needed to meet expenses

Answer 10

Cash budget

Question 11

Data from financial statements that compare two significant figures and express them as:

Answer 11

a percentage or ratio

Question 12

Managers use ratios as internal control devices for:

Answer 12

monitoring how efficiently the organization uses its assets, debt, inventories, etc.

Question 13

A formal verification of an organization’s accounts, records, operating activities, or performance

Answer 13

Audits