Question 1: Operating budgets are:

a) A forecast of expected operating expenses

b) A forecast of operating expenses

c) A forecast of unit production

d) Concerned with the income-generating activities of a firm

e) Concerned with the inflows and outflows of cash

Question 2: Which of the following is not an advantage of budgeting?

a) It forces managers to plan.

b) It provides resources, information that can be used to improve decision making.

c) It aids in the use of resources is an employee by setting a benchmark that can be used for a subsequent evaluation and performance.

d) It provides organisational independence.

e) it improves communication and coordination.

Question 3: the planning phase culminates in a board operating plan that includes:

a) A statement of goals.

b) A statement of subgoals.

c) A statement of board performance objectives.

d) All of the above.

Question 4: Owners equity is:

a) What the business is worth?

b) An internal liability.

c) What the business owes to the owner.

d) All of the above.

Question 5: Current assets comprise:

a) The cash the business holds in a bank over the life of the business.

b) Cash in other assets that will be used, consumed or converted into cash within the next 12 months.

c) Cash and other assets that will be used, consumed or converted into cash over the life of the business.

d) Or inventory or stock on hand and carried over from year to year.

Question 6: Reid Company is budgeting production of 100,000 units of product R for the month of September this year. Production of one unit of product R requires three units of material B. For material B, the actual inventory units at September 1 were 22,000 units and budgeted inventory units at September 30 are 24,000. How many units of material B is Reid planning to purchase during September?

a) 328,000

b) 302,000

c) 298,000

d) 272,000

e) 250,000

Question 7: XYZ has forecast sales for the next three months as follows: January, 10,000 units; February, 15,000 units; and March, 20,000 units. Inventory as of January 1 is expected to be 2,000 units. Ending inventories should equal 25% of the coming months sales needs. How many units should be produced in February?

a) 13,750 units

b) 15,000 units

c) 16,250 units

d) 18,000 units

e) none of the above

Question 8: Acme Company has observed its accounts receivable collection pattern to be as follows: 40% in the month of the sale, 45% in the month following the sale, and 13% in the second month following the sale. Sales for the last three months of the year were as follows: October, $300,000; November, $450,000; and December, $625,000. Sales for January are budgeted to be $375,000. What are the budgeted cash collections for January?

a) $375,000

b) $489,750

c) $495,750

d) $625,000

e) none of the above

Question 9: Scooter Corp. has forecast sales as follows: July, 30,000 units; August, 35,000 units; and Sep-tember, 40,000 units. Finished goods inventory as of July 1 is forecast to be 10,000 units. Fin-ished goods inventory of 20% of the following months sales needs is desired. Each finished unit requires 5 pounds of raw material. The raw materials inventory level on July 1 was 202,500 pounds and the expected raw materials inventory level on July 31 will be 270,000 pounds. How many pounds of raw material should be purchased in July?

a) 27,000 pounds

b) 40,500 pounds

c) 135,000 pounds

d) 202,500 pounds

e) none of the above

Question 10: Which of the following items would have to be included for a company preparing a schedule of cash receipts and disbursements for the calendar year 2019?

a) The annual depreciation for 2019.

b) A purchase order issued in December 2019 for items to be delivered in February 2020.

c) Dividends declared in November 2019, to be paid in January 2020 to shareholders of rec-ord as of December 2019.

d) The amount of uncollectible customer accounts for 2019.

e) Funds borrowed from a bank on a note payable taken out in June 2018 with an agreement to pay the principal and all of the interest owed in December 2019.

Question 11: Individual budget schedules are prepared to develop an annual comprehensive or master budget. The budget schedule that would provide the necessary input data for the direct labor budget would be the:

a) sales forecast.

b) raw materials purchases budget.

c) schedule of cash receipts and disbursements.

d) schedule of manufacturing overhead.

e) production budget.

Question 12: Capital budgets are:

a) Prepared for acquisition of capital items.

b) Prepared for operational activities.

c) Prepared for production activities.

d) Only prepared by top-level management.

Question 13: The strategic plan of an organisation:

a) Provides planning direction for Tactical level managers.

b) Set the direction (vision) for an organisation.

c) Is the basis for organisational budgeting.

d) All of the above.

Question 14: Involvement in the budgeting process should:

a) Be restricted to higher-level management.

b) Include operational people after the process is completed.

c) Never include people who are below tactical level management.

d) Include management and the people who are responsible for achieving budgets.

Question 15: The balance sheet:

a) Measures the financial performance of an organisation.

b) States the financial position of an organisation.

c) Shows the cash flow in an organisation.

d) Only shows the assets of the organisation.

Question 16: Gross profit is calculated as:

a) Sales revenue less all costs.

b) Sales revenue less operational expenses.

c) Sale revenue less net profit.

d) Sales revenue less cost of goods sold only.

Question 17: The time frame for strategic objectives is generally:

a) 3 5 years

b) 1 year

c) 1 to 5 years

d) Over 10 years

Question 18: The sales budget for 2019 estimated that sales would increase by 10% on 2018 actual sales. If Actual sales in 2018 was 300,000 units, The sales budget for 2019 is:

a) 270,000.

b) 330,000.

c) 300,010.

d) 300,000.

Question 19: budget for 2019 estimated that sales would be 200,000 units. The sale price per unit is $2.50. Actual results of the same period were $495,000. The variance is:

a) $5,000 Favourable

b) $5,000 unfavourable

c) $500,000 favourable

d) $495,000 Unfavourable

Question 20: The Budget management process should include contingency plans because:

a) All budgets will not be achieved.

b) There are internal and external factors that can affect the success of budgets.

c) We should always spend under what we expect.

d) It's not required because contingency plans don't allow for mistakes.

Question 21: The budget management process involves the use of the following resources:

a) Financial resource only which is used once the budget is implemented.

b) Human resource is for the preparation and implementation of budgets, Financial resource is for the production and implementation, And physical resource is to ensure we have the time and place to complete the tasks.

c) No resources are required to prepare budgets - They are prepared miraculously.

d) Resource is required money and it's not in the budget.

Question 22: the budget management process should include a communication plan:

a) That outlines the funding available to each department.

b) That customises the information based on audience and relevance.

c) That is sent out as a media release in a national paper.

d) That only communicates to upper management and not everyone involved in the budget process.

Question 23: Training staff involved in the budget management Process:

a) Is essential as it will enable all employees involved in preparing and implementing the budget to perform their roles to ensure they meet budget outcomes.

b) Enables management to delegate their tasks.

c) Involves external training that would not involve mentoring or coaching as this will cost the organisation money.

d) Is not essential as staff were hired to know how to perform this role.