Which of the following statements is false with respect to a budgeted income statement? Its interest expense flows from the financing section of the cash budget. Its net income will impact the ending retained earnings balance shown on the balance sheet. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. Its selling and administrative expenses may include depreciation expense even though it is not a cash flow.

Which of the following statements is false with respect to a budgeted income statement? Its interest expense flows from the financing section of the cash budget. Its net income will impact the ending retained earnings balance shown on the balance sheet. Its cost of goods sold is derived from the corresponding dollar amount shown in the production budget. Its selling and administrative expenses may include depreciation expense even though it is not a cash flow.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 11MC: Which of the following statements is not correct? A. The sales budget is computed by multiplying...

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Which of the following statements is not correct? A. The sales budget is computed by multiplying estimated sales by the sales price. B. The production budget begins with the sales estimated for each period. C. The direct materials budget begins with the sales estimated for each period. D. The sales budget is typically the first budget prepared.
Which of the following statements is incorrect concerning budget preparation? A. The rolling budget approach is not often used in practice because it requires that management be in perpetual budgeting mode. B. If a zero-based budgeting approach is used, the annual budgeting process begins with a review of the results of the prior operating period. C. If a participative approach is used to prepare budgets, all levels of management are involved in the budgeting process. D. The preparation of the sales budget is the starting point in the budgeting process for all companies. E. Participative budgeting increases the risk that employees will create budgetary slack.
Which of the following statements is True? a. Budget data are generally prepared by top management and distributed downward in anorganization b. The budget committee is responsible for preparing detailed budget figures in anorganization c. The primary purpose of the cash budget is to show the expected cash balance at the endof the budget period. d. Under zero-based budgeting, a manager is required to start at zero budget levels each period, as if the programs involved were being initiated for the first time
Which of the following statements is not correct? The revenue budget is the starting point in preparing the master budget. The revenue budget is constructed by multiplying the expected sales in units by the sales price. The production budget is not based on the revenue budget. The cash budget is used to determine whether the firm will have enough cash on hand.
Which of the following statements is/are true? Select one: O a. One disadvantage of participative budgeting is employees' tendency to overestimate of revenues. O b. In a production budget, beginning inventory in units plus budgeted units to be produced equals unit sales minus targeted ending inventory in units. O C. All of the given statements are true O d. Production and inventory budgets form the basis for developing the sales budget. O e. When managers intentionally set budgeted costs too high and budgeted revenues too low, they are creating budgetary slack.
Which of the following statements is incorrect? The cash budget shows anticipated cash flows. The production budget is derived from the direct materials and direct labor budgets. A continuous twelve-month budget results from dropping the month just ended and adding a future month. In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses.
Which of the following would be expected to result in a reduction in actual net profit compared to budgeted net profit in an accounting period? Please select all that apply. A decrease in the actual selling price of products compared to the budgeted selling price of products without a corresponding decrease in the actual costs of producing those goods. An increase in actual expenditure on non-current assets compared to budgeted expenditure on non-current assets. A more productive workforce than budgeted. An increase in the actual cost of raw materials compared to the budgeted cost of raw materials without a corresponding increase in the actual selling price of goods produced.
Which of the following statements is not true? Budgeted sales volumes and terms of trade will enable monthly budgeted cash inflows from sales to be calculated. The budgeted direct costs of sales depend upon the volume of budgeted sales and production. Budgeted fixed costs in the budgeted statement of profit or loss are allocated to each month on the accruals basis, while payments for budgeted fixed costs in the cash budget are allocated to the months in which they are paid. Budgeted net cash flow for the month = the total budgeted monthly cash receipts + the total budgeted monthly cash payments
Which of the following is an example of a situation in which a company could use budget information to make operational changes: Select one: a. Total revenues exceed projected costs. b. Profits are expected to rise. c. Accounts receivables are in order. d. Estimated sales exceed actual sales.
Which of the following statements concerning budget preparation for a merchandiser is correct? A. Operating expenses differ from operating cash outflows solely as a result of timing differences between when an expense is incurred and when an expense is paid. B. Only an understanding of cost behavior is required to prepare an operating expense budget. C. If a company requires its ending inventory to equal a certain percentage of the cost of next month’s sales, the company would be able to prepare purchases budgets for 4 months if it only knew the cost of sales for those 4 months. D. Assuming only a portion of a company’s sales are made on account, bad debt expense under the income statement method is calculated by multiplying sales on account by the estimated uncollectible percentage. E. None of the above statements are correct.
Which of the following is true with respect to the sales budget? Group of answer choices It provides sales data to prepare the budgeted income statement. It captures the variable and fixed expenses of the business. It has no relation with the production budget. It provides sales data to prepare income statements for stockholders and creditors.
1. Which of the following is true?a) The direct materials purchase budget is determined from the direct labour budget.b) The only budget providing input into the revenue budget is the sales budget.c) The direct materials purchase budget and the capital expenditures budget are both determined from the production budget.d) The selling and administrative expense budget is input into the forecasted cost of goods sold. 2. Which of the following describes decision making at the tactical orfunctional level?a) Senior management will need to make long-term decisions about the future of the whole business. Therefore, strategic decisions will be made about which markets the business is to operate in, whether to bid to take over a competitor, etc.b) These decisions are made in focusing on the medium-term future of the business, say looking at the 12-18-month pricing strategy for a product, deciding what products to stock over the summer months, etc. They tend to be focused on particular business…