ACCT 212 Final Exam Review Questions and
Verified Answers
budget Correct Answer: a detailed quantitative plan for acquiring an d using
financial and other resources over a specified forthcoming period of time
-the act of preparing a budget is called budgeting
-the use of budgets to control an organization's activities is known as budgetary
control
what is the use of budgets to control an organization's activities? Correct Answer:
budgetary control
what are some advantages of budgeting? Correct Answer: -it defines goals and
objectives
-enables companies to think about and plan for the future
-it is a means of allocating resources
-it enables companies to coordinate activities
-plans can be communicated
what are the two goals of budgeting? how do they differ? Correct Answer: planning
and control are the two goals of budgeting
-planning involves developing goals and preparing various budgets to achieve those
goals (plan for future and effectively allocate resources for those plans)
-control involves the steps taken by management to increase the likelihood that the
objectives set down while planning are attained and that all parts of the
organization are working together towards that goal
,(involves comparing the budget with what actually happened to understand why
things happen; gathering feedback to ensure the plan is being executed or modified
as circumstances change)
responsibility accounting Correct Answer: an approach that holds managers
accountable for those items - and only those items - that they can actually control
to a significant extent; enables organizations to react quickly to deviations from
their plans and to learn from feedback
given that the master budget is based on various estimates and assumptions, what
are some estimates/assumptions that the sales budget requires? Correct Answer: 1.
what are the budgeted unit sales?
2. what is the budgeted selling price per unit?
3. what percentage of accounts receivable will be collected in the current and
subsequent periods?
what does the production budget tell us? what does it look like? Correct Answer:
the production budget must be adequate to meet budgeted sales and to provide for
the desired ending inventory; used to plan production and paying for production
-ascertains how many units need to be produced to satisfy sales needs and maintain
desired level of finished goods inventory
what does the direct materials budget tell us? Correct Answer: it tells us how much
raw materials need to be purchased for the required level of production and desire
level of ending inventory
sales budget and schedule of expected cash collections Correct Answer: -sales
budget specifies the units to be produced; it is the first budget prepared of the
master budget
-expected cash collections are based on sales from current and prior periods
, expected cash disbursement for materials in the month of sale Correct Answer:
amount of materials purchased x price per lb/amount x percentage paid in month of
sale = expected disbursement in month of sale
direct labor budget Correct Answer: budget that predicts the cost and amount of
labor needed for future period; helps managers predict labor needs and adjust
resources accordingly
manufacturing overhead budget Correct Answer: MOH budget is prepared to
determine expected cash disbursements and the POHR for the next period
-cash expenses are separated from noncash expenses (like depreciation) to
determine how much cash is actually disbursed
-we can find manufacturing overhead rate for quarter by doing total OH/total DLHs
ending finished goods inventory budget Correct Answer: a budget that predicts the
value of ending inventory of finished goods in units and dollars
-computed from direct materials, direct labor, and MOH budgets
-essentially computes the cost of each unit and multiplies that by the number of
units in ending inventory to find the balance of ending finished goods inventory
selling and administrative expense budget Correct Answer: A detailed schedule of
planned expenses that will be incurred in areas other than manufacturing during a
budget period; consists of fixed and variable SG&A
-noncash expenses are subtracted from total SG&A to get cash disbursements
how is the cash budget divided up? what does it look like? Correct Answer: it is
divided into four main sections:
1. the cash receipts section lists all cash inflows excluding cash received from
financing
Verified Answers
budget Correct Answer: a detailed quantitative plan for acquiring an d using
financial and other resources over a specified forthcoming period of time
-the act of preparing a budget is called budgeting
-the use of budgets to control an organization's activities is known as budgetary
control
what is the use of budgets to control an organization's activities? Correct Answer:
budgetary control
what are some advantages of budgeting? Correct Answer: -it defines goals and
objectives
-enables companies to think about and plan for the future
-it is a means of allocating resources
-it enables companies to coordinate activities
-plans can be communicated
what are the two goals of budgeting? how do they differ? Correct Answer: planning
and control are the two goals of budgeting
-planning involves developing goals and preparing various budgets to achieve those
goals (plan for future and effectively allocate resources for those plans)
-control involves the steps taken by management to increase the likelihood that the
objectives set down while planning are attained and that all parts of the
organization are working together towards that goal
,(involves comparing the budget with what actually happened to understand why
things happen; gathering feedback to ensure the plan is being executed or modified
as circumstances change)
responsibility accounting Correct Answer: an approach that holds managers
accountable for those items - and only those items - that they can actually control
to a significant extent; enables organizations to react quickly to deviations from
their plans and to learn from feedback
given that the master budget is based on various estimates and assumptions, what
are some estimates/assumptions that the sales budget requires? Correct Answer: 1.
what are the budgeted unit sales?
2. what is the budgeted selling price per unit?
3. what percentage of accounts receivable will be collected in the current and
subsequent periods?
what does the production budget tell us? what does it look like? Correct Answer:
the production budget must be adequate to meet budgeted sales and to provide for
the desired ending inventory; used to plan production and paying for production
-ascertains how many units need to be produced to satisfy sales needs and maintain
desired level of finished goods inventory
what does the direct materials budget tell us? Correct Answer: it tells us how much
raw materials need to be purchased for the required level of production and desire
level of ending inventory
sales budget and schedule of expected cash collections Correct Answer: -sales
budget specifies the units to be produced; it is the first budget prepared of the
master budget
-expected cash collections are based on sales from current and prior periods
, expected cash disbursement for materials in the month of sale Correct Answer:
amount of materials purchased x price per lb/amount x percentage paid in month of
sale = expected disbursement in month of sale
direct labor budget Correct Answer: budget that predicts the cost and amount of
labor needed for future period; helps managers predict labor needs and adjust
resources accordingly
manufacturing overhead budget Correct Answer: MOH budget is prepared to
determine expected cash disbursements and the POHR for the next period
-cash expenses are separated from noncash expenses (like depreciation) to
determine how much cash is actually disbursed
-we can find manufacturing overhead rate for quarter by doing total OH/total DLHs
ending finished goods inventory budget Correct Answer: a budget that predicts the
value of ending inventory of finished goods in units and dollars
-computed from direct materials, direct labor, and MOH budgets
-essentially computes the cost of each unit and multiplies that by the number of
units in ending inventory to find the balance of ending finished goods inventory
selling and administrative expense budget Correct Answer: A detailed schedule of
planned expenses that will be incurred in areas other than manufacturing during a
budget period; consists of fixed and variable SG&A
-noncash expenses are subtracted from total SG&A to get cash disbursements
how is the cash budget divided up? what does it look like? Correct Answer: it is
divided into four main sections:
1. the cash receipts section lists all cash inflows excluding cash received from
financing
