budgeting process
1. Which of the following is an advantage of the budgeting process?
a. It forces management to focus on the past and not be distracted by the day-to-day operations of the business.
b. It can communicate to employees specific information about their past performance to determine their promotion prospects.
c. It can communicate to employees specific information about their past performance to determine their promotion prospects.
d. It can communicate to employees information about their performance expectations in the period ahead.
2. Which one of the following statements regarding changing inventory costing methods is true?
a. A change in inventory methods can be justified if the change is made to better match profits with revenue
b. Changing inventory costing methods violates comparability
c. One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of shareholders' equity
d. Changing inventory costing methods violates consistency
3. Kristina Consulting, began the year with total assets of $90,000, and liabilities of $30,000. During the year, Kristina Consulting earned revenue of $145,000 and incurred expenses of $20,000. The owners of Kristina Consulting also invested an additional $20,000 in the business and withdrew $50,000 for living expenses. After closing the temporary accounts to an equity account, how much is the equity of the firm at year-end?
a. $90,000
b, $130,000
c. $155,000
d. $190,000
4. Which of the following statements regarding the application of the lower-of-cost-and-net-realisable value rule is true?
a. Generally, historical cost is greater than replacement cost.
b. The lower-of-cost-and-net-realisable-value rule is an exception to the historical cost principle.
c. When the lower-of-cost-and-net-realisable-value rule is used, inventories are valued at their selling price.
d. The lower-of-cost-and-net-realisable-value rule is most commonly applied on a total inventory basis because it is a more prudent approach
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