True or False

Enter a T or an F in the blank to indicate whether the

statement is true or false.

___ 1. The usual starting point in budgeting is to

make a forecast of sales.

___ 2. A self-imposed budget is one prepared by

top management and imposed on other management

levels as it is passed downward through an organiza-

tion.

___ 3. Budgets are planning devices rather than

control devices.

___ 4. The basic idea behind responsibility ac-

counting is that each managers performance should

be judged by how well he or she manages those items

directly under his or her control.

___ 5. Ending inventories occur because an organ-

ization is unable to sell all that it had planned to sell

during a period.

___ 6. The required production in units for a

budget period is equal to the expected unit sales for

the period.

___ 7. Because of the technical nature of budget-

ing, it is best to leave budgeting entirely in the capable

hands of the accounting staff.