1. Which of the following is not a component of the master budget? A. Operating budget B. Budgeted income statement C. Budgeted balance sheet D. Statement of return on investment

2. Which of the following types of standards can be achieved only under perfect conditions? A. Easily attainable standard B. Ideal standard C. Currently attainable standard D. Tight but attainable standard

3. If a company is planning to build inventory, A. production should exceed sales. B. sales should exceed production. C. production should equal sales. D. production should equal inventory.

4. Which of the following is not a benefit of budgeting? A. It forces managers to look to the future B. It plays an important role in communication within the organization C. It serves an important role in motivating and rewarding employees D. It builds organizational slack

5. A master budget is an example of a A. static budget. B. flexible budget. C. standard cost card. D. volume variance.

6. Absorption Costing:

a. Capitalizes fixed overhead into manufacturing cost

b. Is not GAAP

c. Separates variable and fixed costs for evaluation purposes

d. Includes selling & administrative expenses in manufacturing costs

7. Which of the following is the second step of the budgeting cycle?

A. Feedback B. Leading/Directing C. Organizing D. Planning

8. Within the cash budget, if budgeted receipts are less than budgeted disbursements, the company should then plan to:

A. Borrow to cover to shortfall

B. Increase the selling price of goods

C. Reduce projected expenditures.

D. All of the above.

9. Ideal Standards are:

A. motivating to employees

B. the best way to achieve goals

C. discouraging to employees

D. always used in the budgeting process

10. The variable costing income statement is:

A. used to report to shareholders

B. used for internal planning purposes only

C. used to obtain financing from a bank

D. irrelevant to decision making

11. A problem with participative budgeting is:

A. employees may build in organizational slack

B. employees may not be motivated to achieve desired results

C. the company may not be much better off

D. all of the above

12. Which of the following would be an example of a rolling budget for the month beginning April 1, 2014?

a. April 2014-March 2015

b. January 2014-December 2015

c. April 2014

d. March 2015