Chapter 09 Test Bank USE THIS ONE
Accounting (Shanghai Finance University)
Studocu is not sponsored or endorsed by any college or university
Downloaded by Orio Nice ()
,Chapter 9 Profit Planning
16. Which of the following budgets are prepared before the sales budget? F F F F F F F
Budgeted Income Statement F F Direct Labor Budget F F
A) Yes Yes
B) Yes No
C) No Yes
D) No No
Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 1 Level: Easy
F F F F
17. The usual starting point for a master budget is:
F F F F F F F F
A) the direct materials purchase budget.
F F F F
B) the budgeted income statement. F F F
C) the sales forecast or sales budget. F F F F F
D) the production budget. F F
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 1 Level: Easy
F F F F
18. Which of the following budgets are prepared before the cash budget?
F F F F F F F F F F
Selling and Administrative Expense Budget
F F F F Production Budget F
A) Yes Yes
B) Yes No
C) No Yes
D) No No
19. Which of the following benefits could an organization reasonably expect from an
F F F F F F F F F F F F
effective budget program? F F
A) Better control of the organization's costs. F F F F F
B) Better coordination of an organization's activities.
F F F F F
C) Better communication of the organization's objectives.
F F F F F
D) All of the above. F F F
Ans: D AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
20. An organization's budget program should not be used:
F F F F F F F
A) to motivate employees. F F
B) to assign blame to managers that do not meet budgetary goals.
F F F F F F F F F F
C) to help evaluate managers. F F F
Garrison/Noreen /Brewer, Manageria Accounting, Twelfth Edition F 9-5
,Chapter 9 Profit Planning
D) to allocate resources to the various parts of an organization.
F F F F F F F F F
Ans: B AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
21. A basic idea underlying
F F is that a manager should be held
F F F F F F F F F
responsible only for those items that the manager can actually control to a significant
F F F F F F F F F F F F F F
extent.
A) participative budgeting F
B) planning and control F F
C) responsibility accounting F
D) the master budget F F
Ans: C AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
22. When preparing a merchandise purchases budget, the required purchases in
F F F F F F F F F F
units equals: F
A) budgeted unit sales + beginning merchandise inventory + desired merchandise
F F F F F F F F F F
ending inventory. F
B) budgeted unit sales - beginning merchandise inventory + desired F F F F F F F F F
merchandise ending inventory. F F
C) budgeted unit sales - beginning merchandise inventory - desired merchandise
F F F F F F F F F F
ending inventory. F
D) budgeted unit sales + beginning merchandise inventory - desired merchandise
F F F F F F F F F F
ending inventory. F
23. When preparing a direct materials budget, the required purchases of raw
F F F F F F F F F F F
materials in units equals: F F F
A) raw materials needed to meet the production schedule + desired ending
F F F F F F F F F F F
inventory of raw materials - beginning inventory of raw materials. F F F F F F F F F
B) raw materials needed to meet the production schedule - desired ending inventory
F F F F F F F F F F F F
of raw materials - beginning inventory of raw materials.
F F F F F F F F
C) raw materials needed to meet the production schedule - desired ending inventory
F F F F F F F F F F F F
of raw materials + beginning inventory of raw materials.
F F F F F F F F
D) raw materials needed to meet the production schedule + desired ending
F F F F F F F F F F F
inventory of raw materials + beginning inventory of raw materials. F F F F F F F F F
24. Which of the following statements is NOT correct concerning the Manufacturing
F F F F F F F F F F F
Overhead Budget? F
A) The Manufacturing Overhead Budget provides a schedule of all costs of
F F F F F F F F F F F
production other than direct materials and labor costs. F F F F F F F
B) The Manufacturing Overhead Budget shows only the variable portion of
F F F F F F F F F F
manufacturing overhead. F
C) The Manufacturing Overhead Budget shows the expected cash disbursements
F F F F F F F F F
for manufacturing overhead. F F
, Chapter 9 Profit Planning
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
F F F F F F F F F
25. Which of the following statements is NOT correct concerning the Cash Budget?
F F F F F F F F F F F
A) It is not necessary to prepare any other budgets before preparing the Cash
F F F F F F F F F F F F F
Budget.
B) The Cash Budget should be prepared before the Budgeted Income Statement.
F F F F F F F F F F
C) The Cash Budget should be prepared before the Budgeted Balance Sheet.
F F F F F F F F F F
D) The Cash Budget builds on earlier budgets and schedules as well as additional
F F F F F F F F F F F F F
data.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 8 Level: Easy
F F F F
26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the
F F F F F F F F F F F F F F F F
month following sale, and 6% in the second month following sale. The remainder is
F F F F F F F F F F F F F F
uncollectible. Budgeted sales for the next four months are:
F F F F F F F F
January February March April
$300,00
Budgeted sales....... F $200,000 0 $350,000 $250,000
Cash collections in April are budgeted to be:
F F F F F F F
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
F F F F F F
AICPA FN: Reporting LO: 2
F Level: Easy
F F F
Solution:
April sales ($250,000 × 20%)..............
F F F F $ 50,000
F
March sales ($350,000 × 70%)...........
F F F F 245,000
February sales ($300,000 × 6%).........
F F F F F 18,000
F
Total.................................................... $313,000
Accounting (Shanghai Finance University)
Studocu is not sponsored or endorsed by any college or university
Downloaded by Orio Nice ()
,Chapter 9 Profit Planning
16. Which of the following budgets are prepared before the sales budget? F F F F F F F
Budgeted Income Statement F F Direct Labor Budget F F
A) Yes Yes
B) Yes No
C) No Yes
D) No No
Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 1 Level: Easy
F F F F
17. The usual starting point for a master budget is:
F F F F F F F F
A) the direct materials purchase budget.
F F F F
B) the budgeted income statement. F F F
C) the sales forecast or sales budget. F F F F F
D) the production budget. F F
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 1 Level: Easy
F F F F
18. Which of the following budgets are prepared before the cash budget?
F F F F F F F F F F
Selling and Administrative Expense Budget
F F F F Production Budget F
A) Yes Yes
B) Yes No
C) No Yes
D) No No
19. Which of the following benefits could an organization reasonably expect from an
F F F F F F F F F F F F
effective budget program? F F
A) Better control of the organization's costs. F F F F F
B) Better coordination of an organization's activities.
F F F F F
C) Better communication of the organization's objectives.
F F F F F
D) All of the above. F F F
Ans: D AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
20. An organization's budget program should not be used:
F F F F F F F
A) to motivate employees. F F
B) to assign blame to managers that do not meet budgetary goals.
F F F F F F F F F F
C) to help evaluate managers. F F F
Garrison/Noreen /Brewer, Manageria Accounting, Twelfth Edition F 9-5
,Chapter 9 Profit Planning
D) to allocate resources to the various parts of an organization.
F F F F F F F F F
Ans: B AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
21. A basic idea underlying
F F is that a manager should be held
F F F F F F F F F
responsible only for those items that the manager can actually control to a significant
F F F F F F F F F F F F F F
extent.
A) participative budgeting F
B) planning and control F F
C) responsibility accounting F
D) the master budget F F
Ans: C AACSB: Reflective Thinking
F F F
AICPA BB: Resource Management, Critical Thinking
F F F F F AICPA FN: Reporting F F F
LO: 1 Level: Easy
F F
22. When preparing a merchandise purchases budget, the required purchases in
F F F F F F F F F F
units equals: F
A) budgeted unit sales + beginning merchandise inventory + desired merchandise
F F F F F F F F F F
ending inventory. F
B) budgeted unit sales - beginning merchandise inventory + desired F F F F F F F F F
merchandise ending inventory. F F
C) budgeted unit sales - beginning merchandise inventory - desired merchandise
F F F F F F F F F F
ending inventory. F
D) budgeted unit sales + beginning merchandise inventory - desired merchandise
F F F F F F F F F F
ending inventory. F
23. When preparing a direct materials budget, the required purchases of raw
F F F F F F F F F F F
materials in units equals: F F F
A) raw materials needed to meet the production schedule + desired ending
F F F F F F F F F F F
inventory of raw materials - beginning inventory of raw materials. F F F F F F F F F
B) raw materials needed to meet the production schedule - desired ending inventory
F F F F F F F F F F F F
of raw materials - beginning inventory of raw materials.
F F F F F F F F
C) raw materials needed to meet the production schedule - desired ending inventory
F F F F F F F F F F F F
of raw materials + beginning inventory of raw materials.
F F F F F F F F
D) raw materials needed to meet the production schedule + desired ending
F F F F F F F F F F F
inventory of raw materials + beginning inventory of raw materials. F F F F F F F F F
24. Which of the following statements is NOT correct concerning the Manufacturing
F F F F F F F F F F F
Overhead Budget? F
A) The Manufacturing Overhead Budget provides a schedule of all costs of
F F F F F F F F F F F
production other than direct materials and labor costs. F F F F F F F
B) The Manufacturing Overhead Budget shows only the variable portion of
F F F F F F F F F F
manufacturing overhead. F
C) The Manufacturing Overhead Budget shows the expected cash disbursements
F F F F F F F F F
for manufacturing overhead. F F
, Chapter 9 Profit Planning
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
F F F F F F F F F
25. Which of the following statements is NOT correct concerning the Cash Budget?
F F F F F F F F F F F
A) It is not necessary to prepare any other budgets before preparing the Cash
F F F F F F F F F F F F F
Budget.
B) The Cash Budget should be prepared before the Budgeted Income Statement.
F F F F F F F F F F
C) The Cash Budget should be prepared before the Budgeted Balance Sheet.
F F F F F F F F F F
D) The Cash Budget builds on earlier budgets and schedules as well as additional
F F F F F F F F F F F F F
data.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
F F F F F F F
AICPA FN: Reporting LO: 8 Level: Easy
F F F F
26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the
F F F F F F F F F F F F F F F F
month following sale, and 6% in the second month following sale. The remainder is
F F F F F F F F F F F F F F
uncollectible. Budgeted sales for the next four months are:
F F F F F F F F
January February March April
$300,00
Budgeted sales....... F $200,000 0 $350,000 $250,000
Cash collections in April are budgeted to be:
F F F F F F F
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
F F F F F F
AICPA FN: Reporting LO: 2
F Level: Easy
F F F
Solution:
April sales ($250,000 × 20%)..............
F F F F $ 50,000
F
March sales ($350,000 × 70%)...........
F F F F 245,000
February sales ($300,000 × 6%).........
F F F F F 18,000
F
Total.................................................... $313,000
