Multiple Choice Questions:

1) The cash budget and the budgeted financial statements are collectively known as the:

A) Operating budget.

B) Master budget.

C) Financial budget.

D) Production budget.

2) Which of the following statements is true of the operating budget?

A) It is a part of the financial budget.

B) It includes the capital expenditures budget.

C) It includes the sales revenue budget.

D) Its final component is the cash budget.

3) Which of the following statements is true of the capital expenditures budget?

A) It is a part of the financial budget.

B) It must be completed after the budgeted income statement is prepared.

C) It includes the sales budget.

D) It must be completed before the cash budget is prepared.

4) The direct material budget is prepared on the basis of the:

A) Cash budget.

B) Master budget.

C) Capital expenditure budget.

D) Production budget.

5) Which of the following is true of the sales budget?

A) It provides sales values that are used to prepare financial statements for external reporting purposes.

B) It captures the variable and fixed expenses of the business.

C) It is used in the production budget.

D) It shows the value of expected production in a period.