16. The process of planning future business actions and expressing those plans in a formal manner, usually in monetary terms, is called budgeting.
A. True
B. False
Ans: A
17. The budgeting process can be used to promote a positive effect on employees' attitudes, but it can also yield a negative one.
A. True
B. False
Ans: a
18. The task of preparing the budget normally is the responsibility of one department, the controller's department or a department of one of the high-level managers.
A. True
B. False
Ans: B
19. Most successful businesses generally prepare their budgets from 'the top down'. These budgets are tightly controlled by upper management.
A. True
B. False
Ans: B
20. Since the budget period normally coincides with the accounting period, budgets of less than one year or greater than one year are not normally prepared.
A. True
B. False
Ans: B
21. Which of the following is NOT true about the Master Budget?
a) It is composed of many interrelated budgets.
b) It consists of 2 classes of budgets: Operating Budgets and Financial Budgets.
c) Within the master budget the first budget to be prepared is the sales budget.
d) It constitutes a plan of action for a specified period of time.
e) All of the above are true.
Ans: E
22. The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is:
A. $ 6,000 increase.
B. $10,000 decrease.
C. $22,000 decrease.
D. $15,000 increase.
Ans: A
A. True
B. False
Ans: A
17. The budgeting process can be used to promote a positive effect on employees' attitudes, but it can also yield a negative one.
A. True
B. False
Ans: a
18. The task of preparing the budget normally is the responsibility of one department, the controller's department or a department of one of the high-level managers.
A. True
B. False
Ans: B
19. Most successful businesses generally prepare their budgets from 'the top down'. These budgets are tightly controlled by upper management.
A. True
B. False
Ans: B
20. Since the budget period normally coincides with the accounting period, budgets of less than one year or greater than one year are not normally prepared.
A. True
B. False
Ans: B
21. Which of the following is NOT true about the Master Budget?
a) It is composed of many interrelated budgets.
b) It consists of 2 classes of budgets: Operating Budgets and Financial Budgets.
c) Within the master budget the first budget to be prepared is the sales budget.
d) It constitutes a plan of action for a specified period of time.
e) All of the above are true.
Ans: E
22. The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is:
A. $ 6,000 increase.
B. $10,000 decrease.
C. $22,000 decrease.
D. $15,000 increase.
Ans: A
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