Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Question
Chapter 14, Problem 1Q
To determine
Whether the given statement is correct
Expert Solution & Answer
Explanation of Solution
Given statement:
The budgets are beneficial only to the small scale companies as they can estimate the sales with accuracy.
Whether the given statement is correct:
The statement is incorrect as budgets are useful for both the small and large companies. Budgets are the tool of communication where the company communicates its objectives through budgets in a document by formalizing the plans framed by management.
Budgets and these kinds of benefits are applicable to all sizes of the companies which operate at various levels of complexity.
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Students have asked these similar questions
Budgets are useful only for small companies that can estimate sales with accuracy. Do you agree with this statement?
Various types of budgets facilitate understanding about the big picture of a business. There are budgets that are set and unchangeable, as well as budgets that allow for variability. •What are two different types of budgets? And how do they compliment each other? •What is the difference between a flexible budget?and a static budget? •Which budget works best for a business?
If the company reduces inventory without affecting sales, what effect should this have on the company’s position in the terms of the cash budget and the balance sheet?
Chapter 14 Solutions
Survey Of Accounting
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
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- 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…arrow_forwardWhich 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.arrow_forwardGenerally speaking, budgets are not used to: assist in the control of profit and operations. facilitate communication and coordinate activities. evaluate performance. create a plan of action. identify a company's most profitable products.arrow_forward
- since flexible budget is more accurate in measuring performance, can company just develop flexible budget without the static budget? Why or why not?arrow_forwardWhich 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.arrow_forward1. What is the difference between strategic and operational plans?2. What is the purpose of financial plans?3. What are the component of an operations plans?4. What are the pro forma financial statements?5. What is the percentage of sales forecasting method? What are some of the limitations financial analysis should be aware of in applying this method?6. What is a cash budget? What are the usual steps involved in preparing a cash budget?7. Explain the difference between deterministic and probabilistic financial planning models.arrow_forward
- Briefly describe human behavior problems that might arise if budget goals are set too tightly. What behavioral problems are associated with setting a budget too loosely? When would a company use zero-based budgeting? Why should the production requirements outlined in the production budget be carefully coordinated with the sales budget?arrow_forward1 i. Discuss the factors that are likely to cause managers to submit budget estimates of sales and costs that do not represent their best estimate or expectations of what will actually occur. ii. Suggest, as a budget accountant, what procedures you would advise in order to minimize the likelihood of such biased estimate arising.arrow_forward1. 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…arrow_forward
- Hello, for this same problem, what is the sales budget?arrow_forwardIn a production budget, the volume of production is the first thing to calculate, but deducting the estimated units in beginning inventory and adding the desired units in ending inventory seems opposite. Can you explain so that we can all understand better?arrow_forwardBudgeting is essential to businesses, but it is not that simple to implement. What are some challenges and weaknesses that a firm may find in the budgeting process?arrow_forward
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