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1
A budget is a detailed plan, expressed in qualitative terms, that specifies how resources will be acquired and used during a specified period of time.
A)True
B)False
2
Budgeting systems have five primary purposes.
A)True
B)False
3
The master budget is a comprehensive set of budgets that covers all phases of an organization's operations for a specified period of time.
A)True
B)False
4
Budgeted financial statements, such as a budgeted balance sheet, budgeted income statement, and budgeted statement of cash flows, are often called pro forma financial statements.
A)True
B)False
5
A rolling budget and a participative budget are synonymous terms.
A)True
B)False
6
A capital budget is a plan that shows how an organization will acquire its financial resources, such as through issuing stock or borrowing money.
A)True
B)False
7
Sales forecasting is a critical step in the budgeting process, and it is very easy to do accurately.
A)True
B)False
8
The operational budgets of individual companies in various industries are widely varied, and have very few similarities.
A)True
B)False
9
Nonprofit organizations that offer services free of charge do not prepare master budgets.
A)True
B)False
10
The activity-based budgeting (ABB) process uses the reverse flow of the activity-based costing (ABC) system.
A)True
B)False
11
A sales budget is the first budget prepared during the budgetary process.
A)True
B)False
12
A production budget for a manufacturer shows the dollar amount of the units scheduled for production.
A)True
B)False
13
The production budget drives the direct-material budget, direct-labor budget, and overhead budget.
A)True
B)False
14
The production budget (units to be produced) is based on the following formula:
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A)True
B)False
15
The direct-material budget (raw material to be purchased) is based on the following formula:
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A)True
B)False
16
The direct-labor budget shows the number of hours and the cost of direct labor to be used during the budget period.
A)True
B)False
17
When production employees are retained when production declines, the direct labor is a unit-level cost.
A)True
B)False
18
The total cost of manufacturing overhead, as shown in the manufacturing overhead budget, is shown as a cash disbursement in the cash disbursements budget.
A)True
B)False
19
A major difference between traditional budgeting processes and activity-based budgeting (ABB) lies in the hierarchy of costs.
A)True
B)False
20
Fixed manufacturing costs are classified as facility- and general-operations-level costs in a manufacturing overhead budget, when using activity-based budgeting.
A)True
B)False
21
A cash receipts budget details all the sources of cash expected to be received during the budget period.
A)True
B)False
22
A cash disbursements budget shows all the expenses of operations and cash disbursements for debt and taxes.
A)True
B)False
23
The cash budget details the expected cash receipts and cash disbursements during a budget period.
A)True
B)False
24
The production budget, direct-material budget, direct-labor budget, and manufacturing overhead budget provide the details for preparing a budgeted schedule of cost of goods manufactured.
A)True
B)False
25
A budgeted income statement will include accrued expenses and other noncash expenditures.
A)True
B)False
26
A budgeted statement of cash flows details the cash flows from unit-level, product-level, and general-operations-level costs.
A)True
B)False
27
A budgeted balance sheet is the last budget prepared for the master budget.
A)True
B)False
28
One of the basic assumptions and predictions underlying the master budget is that sales revenues will be generated as forecasted.
A)True
B)False
29
One method of coping with the uncertainty of the assumptions and predictions used to construct the master budget is to supplement the process with a financial planning model.
A)True
B)False
30
The budget director, or chief budget officer, should not only consider financial resources when preparing the budget but should also take into consideration human resources.
A)True
B)False
31
A set of written instructions that specifies who will provide budgetary data and its form, and who should receive various schedules comprising the budget, can be found in the budget manual.
A)True
B)False
32
Presently, e-budgeting has had little impact on the budgeting process.
A)True
B)False
33
A computer firewall is used primarily to prevent computer viruses from entering the organization's computer system(s).
A)True
B)False
34
An organization that has its managers prepare their budgets as if they are being prepared for the first time is using a budgeting process known as zero-base budgeting.
A)True
B)False
35
The base-budgeting approach does not go to the extreme of zero-based budgeting, but does impose absolute minimal levels of resources that a subunit needs to be a viable entity.
A)True
B)False
36
A base package is an initial budget that includes minimal resources needed for a subunit to exist at an absolute minimal level.
A)True
B)False
37
An incremental package is a budget that details the additional resources needed to add various activities to an annual budget.
A)True
B)False
38
The last and final phase of a product's life cycle is production.
A)True
B)False
39
In order to justify a new product, the sales revenues it will generate must be great enough to cover the future costs of manufacturing and distributing the product.
A)True
B)False
40
Padding the budget will cause budgetary slack.
A)True
B)False
41
One of the primary reasons people often pad the budget is to make their performance look better than expected.
A)True
B)False
42
Participative budgeting will always have a positive effect and promote positive attitudes among an organization's personnel.
A)True
B)False





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