Module 21 Flashcards
Which of the following is a suggested technique for managing the budgeting process in a manner that increases employee motivation?
A. Measure the budget against performance only when assessing poor performers
B. Never alter the budget
C. Top management should disassociate itself from the budget
D. Emphasize the budget as a planning device
. Emphasize the budget as a planning device
For budgets to be successful, managers should do all of the following except:
A. Encourage wide participation by all management levels
B. Use budget performance reports to identify both good and poor performance
C. Emphasize the importance of budgeting as a planning device to the employees
D. Emphasize the importance of meeting the budget in order to receive performance raises
Emphasize the importance of meeting the budget in order to receive performance raises
Which of the following aspects related to budgeting and human behavior is not correct?
A. Budgets often produce strong reactions in people.
B. Line managers will not respect the budget if they perceive a lack of commitment by top management.
C. A disadvantage of the use of budgets is that they always decrease employee motivation.
D. Personnel who do not participate in budget preparation are likely to lack a commitment in achieving their part of the budget.
A disadvantage of the use of budgets is that they always decrease employee motivation.
Budgetary slack refers to:
A. Intentionally requesting more funds in the budget than needed
B. The time lag between budget preparation and actual operations.
C. Overspending the budget allowance
D. The time lag between budget discussions and actual preparation of budgets
Intentionally requesting more funds in the budget than needed
T/F: A top-down approach to budgeting involves little participation in the budget process by lower level managers and employees.
True
T/F: Life-cycle budgeting is based on a moving time frame that extends over a fixed period.
False
Which of the following budgets for a manufacturing firm indicates the raw materials that must be acquired to meet production needs and ending inventory requirements?
A. The sales budget
B. The production budget
C. The purchases budget
D. The manufacturing disbursements budget
The purchases budget
In a manufacturing setting, the purchase budget is based on: A. The sales budget B. The production budget C. The manufacturing labor budget D. The cash disbursements
The production budget
Which of the following items is not typically considered in the development of the cash budget? A. Selling expenses B. Depreciation Expense C. Administrative expenses D. Purchases
Depreciation Expense
Generally, the budgeting process concludes with the preparation of the: A. Cash budget B. Production budget C. Selling expense budget D. Budgeted financial statements
Budgeted financial statements
Generally, the first of the following budgets to be prepared is the: A. Cash budget B. Operations budget C. Sales budget D. Purchases budget
Sales budget
Which of the following statements about budgeted financial statements is not true?
A. Budgeted financial statements need to adhere to the same format as the audited financial statements.
B. Development of budgeted financial statements is facilitated by spreadsheet programs.
C. Budgeted financial statements reflect the results of operations assuming all budgeted predictions are correct.
D.Budgeted financial statements are hypothetical.
Budgeted financial statements need to adhere to the same format as the audited financial statements.
T/F: A budget that summarizes all receipts and disbursements expected to occur during the budget period is called a receipts and disbursements budget.
False
T/F: The most appropriate and commonly followed sequences of preparing budget schedules is to prepare the Sales Budget, followed by the production budget, followed by the purchases budget.
True
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ budgets cut across functional areas to bring together all budgeted costs for processes, products, or other cost objectives. A. Master B. Activity-based C. Cash D. Capital
Activity-based
Which of the following statements concerning zero-based budgeting is true?
A. Zero-based budgeting specifies that every line item must be rounded to the nearest thousand dollar increment.
B. Zero-based budgeting specifies that every expenditure must be justified.
C. Zero-based budgeting is a variation of the incremental approach.
D. Zero-based budgeting is mainly used to assess research and development departments and similar departments where the relationship between inputs and outputs is weakest.
Zero-based budgeting specifies that every expenditure must be justified.
Which budgeting approach is widely used in government and non-profit organizations?
Which budgeting approach is widely used in government and non-profit organizations?
The incremental approach
Which budgeting approach is used most often for service, manufacturing, and distribution activities where there exists a clearly defined relationship between effort and accomplishment? A. The continuous budgeting approach B. The input/output approach C. The activity based approach D. Participation budgeting
The input/output approach
Which budgeting approach seeks to reduce expenditures on a monthly basis? A. The continuous improvement approach B. The input/output approach C. The activity based approach D. Participation budgeting
The continuous improvement approach
Which of the following statements concerning the minimum level approach to budgeting is true?
A. The minimum level approach to budgeting establishes a base amount for all budget items and requires explanation or justification for any budgeted amount above that level.
B. The minimum level approach to budgeting budgets physical inputs and costs as functions of planned activity.
C. The minimum level approach to budgeting budgets costs for a coming period as a dollar or percentage change from the amount budgeted or spent in some previous period.
D. The minimum level approach to budgeting has been more widely used in government than in business organizations
The minimum level approach to budgeting establishes a base amount for all budget items and requires explanation or justification for any budgeted amount above that level.
Which of the following statements concerning an incremental budget is true?
A. An incremental budget has revenues and expenditures assigned to specific categories and items of responsibility.
B. An incremental budget begins with the premise that every dollar of budgeted expenditure must be justified.
C. An incremental budget is often used where the relationships between inputs and outputs are weak or nonexistent.
D. An incremental budget has revenues and expenditures allocated to general areas.
An incremental budget is often used where the relationships between inputs and outputs are weak or nonexistent.
T/F: All type of Operations budgeting emphasizes activities performed, rather than traditional expense categories?
False
T/FA more traditional budget would emphasize expense categories such as salaries, office supplies, and maintenance, while an activity-based budget would emphasize activities performed.
True
T/F: All type of Operations budgeting emphasizes activities performed, rather than traditional expense categories?
False
T/F: A more traditional budget would emphasize expense categories such as salaries, office supplies, and maintenance, while an activity-based budget would emphasize activities performed.
True
T/F: The incremental approach to budgeting establishes a base amount for all budget items and requires explanation or justification for any budgeted amount above that level.
False
The input/output approach to budgeting budgets physical inputs and costs as a function of planned activity.
True
When management directs attention only to those activities not proceeding according to plan, they are engaging in: A. Activity-based management B. Organization-based management C. Management by exception D. Just-in-time management
Management by exception
Budgets improve \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ and \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. A. Communication; profits B. Information; revenues C. Revenues; profits D. Communication; coordination
Communication; coordination
The ability to move from an informal “reaction” style of management to a formal “proactive” style is one of the primary direct results of: A. Formal budgeting B. Specialty training C. Ethics D. Hiring outside consultants
Formal budgeting
Evaluating plans and budgets in comparison with actual activities is directly related to: A. Cost control B. Planning C. Financial analysis D. Control
Control
Which of the following factors is not an advantage of preparing operating budgets?
A. Improved communications
B. Improved basis of performance evaluation
C. Increased employee loyalty
D. Improved planning
Increased employee loyalty
T/F: An operating budget is a prediction of expected revenues and expenses and other operating and financing transactions for a future period.
True
T/F: The traditional justifications of budgeting include improved communications, improved planning, and improved sales.
False
