Each of the following statements includes a pair of words within parenthesis. Indicate which of the words should be chosen to make the statement true. The first statement is done as an example.

1. A ( loan application / budget ) is a detailed financial plan that quantifies future expectations and actions relative to acquiring and using resources.

2. Budgets ( should / should not ) be used to provide managers with preapproval for execution of spending plans.

3. The ( master budget / sales budget ) is a comprehensive document specifying sales targets, production activities, and financing actions.

4. Responsibility accounting is a concept under which managers are held accountable for transactions and events ( beyond / under ) their direct influence and control.

5. Some entities will follow a top-down ( mandated / participative ) approach to budgeting.

6. A deliberate effort to create breathing room within a budget is known as (padding the budget / aerating ).

7. With ( incremental budgeting / zero-based budgeting ), each expenditure item must be justified for the new budget period.

8. The starting point for the master budget is an assessment of anticipated ( sales / production ).

9. This comes before the other: ( production budget / materials purchases budget ).

10. A ( static budget / flexible budget ) is not designed to change with changes in activity level.