1. Which of the following statements regarding budget is false?

a. They are formal documents that quantify a companys plan.

b. They enhance communication and coordination.

c. They are useful in planning but not in control.

d. They provide a basis for evaluating performance.

2. Which of the following statements regarding a sales budget is false?

a. Input from sales force may be useful in predicting sales.

b. Very large companies may hire economists to help forecast sales.

c. The sales budget is prepared before cash receipts and disbursement budget.

d. The sales budget is prepared after the production budget.

3. Which of the following items do not require a cash outflow?

a. Salaries

b. Purchase of raw materials

c. Advertising

d. Depreciation.

4. Which of the following statements regarding zero-base budgeting is false?

a. The budget begins from scratch.

b. It takes into account last period or any other previous period as base.

c. Under this method every activity needs to be justified.

d. It is time consuming and an expensive method.

5. Which of the following statements regarding key budget factor is true?

a. It does not limit the activities of the functional budgets.

b. It is identified prior to the preparation of all budgets.

c. The budget of key budget factor is prepared at the end.

d. Generally production volume is a key budget factor.