Question 30 The master budget includes: Answer Operating budgets. A capital expenditures budget. A budgeted income statement. A cash budget. All of these.
Question 31 A comprehensive or overall formal plan for a business that includes specific plans for expected sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as well as a budgeted income statement and balance sheet, is called a: Answer Master budget. Cash budget. Capital expenditures budget. Rolling budget. Production budget.
Question 32 Assuming a bottom-up process of budget development, which of the following should be initially responsible for developing sales estimates? Answer The budget committee. The accounting department. The sales department. Top management. The marketing department.
Question 33 A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a: Answer General and administrative expense budget. Sales budget. Cash payments budget. Overhead budget. Selling expense budget.
Question 34 Which of the following would not be used in preparing a cash budget for October? Answer Beginning cash balance on October 1. Budgeted sales and collections for October. Estimated depreciation expense for October. Budgeted salaries expense for October. Budgeted capital equipment purchases for October.
Question 35 Larger, more complex organizations usually require a longer time to prepare their budgets than smaller organizations because of the considerable effort to coordinate the different units within the business. Answer True False
Question 36 A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a: Answer Rolling budget. Production budget. Flexible budget. Merchandise purchases budget. Fixed budget.
Question 37 Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards. Answer True False
Question 38 The difference between actual and standard cost caused by the difference between the actual quantity and the standard quantity is called the: Answer Controllable variance. Standard variance. Budget variance. Quantity variance. Price variance.
Question 39 The difference between the total budgeted fixed overhead cost and the fixed overhead applied to production using the predetermined overhead rate is the: Answer Production variance. Volume variance. Overhead cost variance. Quantity variance. Controllable variance.
Question 40 The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are: Answer Variable costs. Fixed costs. Standard costs. Product costs. Period costs.
Question 41 Sales variances allow managers to focus on sales mix as well as sales quantities. Answer True False
Question 42 When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance. Answer True False
Question 43 Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell. Answer True False
Question 44 The process of analyzing alternative investments and deciding which assets to acquire or sell is known as: Answer Planning and control. Capital budgeting. Variance analysis. Master budgeting. Managerial accounting.
Question 45 The internal rate of return equals the rate that yields a net present value of zero for an investment. Answer True False
Question 46 The payback method of evaluating an investment fails to consider how long the investment will generate cash inflows beyond the payback period. Answer True False
Question 47 In a make or buy decision, management should focus on costs that are constant under the two alternatives. Answer True False
Question 48 The calculation of the payback period for an investment when net cash flow is even (equal) is: Answer Cost of investment/Annual net cash flow Cost of investment/Total net cash flow Annual net cash flow/Cost of investment Total net cash flow/Cost of investment Total net cash flow/Annual net cash flow
Question 49 The accounting rate of return is calculated as: Answer The after-tax income divided by the total investment. The after-tax income divided by the annual average investment. The cash flows divided by the annual average investment. The cash flows divided by the total investment. The annual average investment divided by the after-tax income.