Which of the following statements is TRUE about the financial budget?

It includes the capital expenditures budget.

It must be completed before the budgeted income statement is prepared.

It includes the sales budget.

It includes the cash budget and the budgeted balance sheet.

Assume that AAA Company's Procurement Department is a centralized service department serving all business units, which of the following would be the MOST appropriate cost driver or assignment basis?

Answer

Number of purchase orders

Number of employees

Number of reports prepared

Number of service hours provided

The capital expenditure budget stands alone and is not part of either the operating budget or the financial budget.

True

False

A company has prepared the operational budget and the cash budget and is now preparing the budgeted balance sheet. To provide the balance for Accounts receivable, which document should be used?

Answer

Inventory, purchases and cost of goods sold budget

Sales budget plus budgeted cash collections

Cash budget

Operating expenses budget

Michael McNaulty is responsible for running the accounting department of a large manufacturing company. The company has multiple divisions and multiple products. McNaulty's business unit would most accurately be described as a(n):

Answer

cost center.

revenue center.

profit center.

investment center.

A budgeted income statement is based on estimated amounts and not actual amounts.

True

False

Which of the following is an example of the benchmarking function of a budget?

Answer

A budget demands integrated input from different business units and functions.

Budgeting requires close cooperation between accountants and operational personnel.

Budget figures are used to evaluate the performance of managers.

The budget outlines a specific course of action for the coming period.