A major benefit of effective budgeting is that ________.

A) it compels managers to think ahead

B) it aids managers in communicating objectives to employees

C) it provides benchmarks to evaluate subsequent performance

D) all of the above

A(n) ________ starts with the assumption that current activities in a company will not automatically continue in the next period.

A) activity-based budget

B) strategic budget

C) master budget

D) zero-base budget

The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________.

A) the SEC; the audit committee

B) stockholders; creditors

C) lower level managers and employees; top management

D) creditors; stockholders

An example of a favorable variance is ________.

A) actual revenues are less than expected revenues

B) actual expenses are less than expected expenses

C) actual material prices are greater than expected material prices

D) expected labor costs are less than actual labor costs

Spending less than budgeted for maintenance costs will result in a(n) ________ variance. When actual revenues exceed budgeted revenues, this results in a(n) ________ variance.

A) unfavorable; unfavorable

B) unfavorable; favorable

C) favorable; unfavorable

D) favorable; favorable

When managers make decisions, the accountant's primary role is ________.

A) making the decision

B) providing information that may be useful to the manager

C) uncertain because it depends on the decision being made

D) uncertain because it depends on the manager

Information is relevant in business decisions if it is a(n) ________.

A) expected future revenue or it differs among alternatives

B) expected future revenue and it differs among alternatives

C) past revenue and it differs among alternatives

D) expected future revenue that differs from past revenue