Chapter 09 Test Bank USE THIS ONE
Accounting (Shanghai Finance University)
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,Chapter 9 Profit Planning
16. Which of the following budgets are prepared before the sales budget? L L L L L L L
Budgeted Income Statement L L Direct Labor Budget L L
A) Yes Yes
B) Yes No
C) No Yes
D) No No
Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 1 Level: Easy
L L L L
17. The usual starting point for a master budget is:
L L L L L L L L
A) the direct materials purchase budget.
L L L L
B) the budgeted income statement. L L L
C) the sales forecast or sales budget. L L L L L
D) the production budget. L L
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 1 Level: Easy
L L L L
18. Which of the following budgets are prepared before the cash budget?
L L L L L L L L L L
Selling and Administrative Expense Budget
L L L L Production Budget L
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
L L L L L L L L L L L L
effective budget program? L L
A) Better control of the organization's costs. L L L L L
B) Better coordination of an organization's activities.
L L L L L
C) Better communication of the organization's objectives.
L L L L L
D) All of the above. L L L
Ans: D AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
20. An organization's budget program should not be used:
L L L L L L L
A) to motivate employees. L L
B) to assign blame to managers that do not meet budgetary goals.
L L L L L L L L L L
C) to help evaluate managers. L L L
Garrison/Noreen /Brewer, Managerial Accounting, Twelfth Edition 9-5
,Chapter 9 Profit Planning
D) to allocate resources to the various parts of an organization.
L L L L L L L L L
Ans: B AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
21. A basic idea underlying
L L is that a manager should be held
L L L L L L L L L
responsible only for those items that the manager can actually control to a significant
L L L L L L L L L L L L L L
extent.
A) participative budgeting L
B) planning and control L L
C) responsibility accounting L
D) the master budget L L
Ans: C AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
22. When preparing a merchandise purchases budget, the required purchases in
L L L L L L L L L L
units equals: L
A) budgeted unit sales + beginning merchandise inventory + desired merchandise
L L L L L L L L L L
ending inventory. L
B) budgeted unit sales - beginning merchandise inventory + desired L L L L L L L L L
merchandise ending inventory. L L
C) budgeted unit sales - beginning merchandise inventory - desired merchandise
L L L L L L L L L L
ending inventory. L
D) budgeted unit sales + beginning merchandise inventory - desired merchandise
L L L L L L L L L L
ending inventory. L
23. When preparing a direct materials budget, the required purchases of raw
L L L L L L L L L L L
materials in units equals: L L L
A) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L
inventory of raw materials - beginning inventory of raw materials. L L L L L L L L L
B) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L
of raw materials - beginning inventory of raw materials.
L L L L L L L L
C) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L
of raw materials + beginning inventory of raw materials.
L L L L L L L L
D) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L
inventory of raw materials + beginning inventory of raw materials. L L L L L L L L L
24. Which of the following statements is NOT correct concerning the Manufacturing
L L L L L L L L L L L
Overhead Budget? L
A) The Manufacturing Overhead Budget provides a schedule of all costs of
L L L L L L L L L L L
production other than direct materials and labor costs. L L L L L L L
B) The Manufacturing Overhead Budget shows only the variable portion of
L L L L L L L L L L
manufacturing overhead. L
C) The Manufacturing Overhead Budget shows the expected cash disbursements
L L L L L L L L L
for manufacturing overhead. L L
, Chapter 9 Profit Planning
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
L L L L L L L L L
25. Which of the following statements is NOT correct concerning the Cash Budget?
L L L L L L L L L L L
A) It is not necessary to prepare any other budgets before preparing the Cash
L L L L L L L L L L L L L
Budget.
B) The Cash Budget should be prepared before the Budgeted Income Statement.
L L L L L L L L L L
C) The Cash Budget should be prepared before the Budgeted Balance Sheet.
L L L L L L L L L L
D) The Cash Budget builds on earlier budgets and schedules as well as additional
L L L L L L L L L L L L L
data.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 8 Level: Easy
L L L L
26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the
L L L L L L L L L L L L L L L L
month following sale, and 6% in the second month following sale. The remainder is
L L L L L L L L L L L L L L
uncollectible. Budgeted sales for the next four months are:
L L L L L L L L
January February March April
$300,00
Budgeted sales....... L $200,000 0 $350,000 $250,000
Cash collections in April are budgeted to be:
L L L L L L L
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
L L L L L L
AICPA FN: Reporting LO: 2
L Level: Easy
L L L
Solution:
April sales ($250,000 × 20%)..............
L L L L $ 50,000
L
March sales ($350,000 × 70%)...........
L L L L 245,000
February sales ($300,000 × 6%).........
L L L L L L18,000
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? L L L L L L L
Budgeted Income Statement L L Direct Labor Budget L L
A) Yes Yes
B) Yes No
C) No Yes
D) No No
Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 1 Level: Easy
L L L L
17. The usual starting point for a master budget is:
L L L L L L L L
A) the direct materials purchase budget.
L L L L
B) the budgeted income statement. L L L
C) the sales forecast or sales budget. L L L L L
D) the production budget. L L
Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 1 Level: Easy
L L L L
18. Which of the following budgets are prepared before the cash budget?
L L L L L L L L L L
Selling and Administrative Expense Budget
L L L L Production Budget L
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
L L L L L L L L L L L L
effective budget program? L L
A) Better control of the organization's costs. L L L L L
B) Better coordination of an organization's activities.
L L L L L
C) Better communication of the organization's objectives.
L L L L L
D) All of the above. L L L
Ans: D AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
20. An organization's budget program should not be used:
L L L L L L L
A) to motivate employees. L L
B) to assign blame to managers that do not meet budgetary goals.
L L L L L L L L L L
C) to help evaluate managers. L L L
Garrison/Noreen /Brewer, Managerial Accounting, Twelfth Edition 9-5
,Chapter 9 Profit Planning
D) to allocate resources to the various parts of an organization.
L L L L L L L L L
Ans: B AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
21. A basic idea underlying
L L is that a manager should be held
L L L L L L L L L
responsible only for those items that the manager can actually control to a significant
L L L L L L L L L L L L L L
extent.
A) participative budgeting L
B) planning and control L L
C) responsibility accounting L
D) the master budget L L
Ans: C AACSB: Reflective Thinking
L L L
AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L
LO: 1 Level: Easy
L L
22. When preparing a merchandise purchases budget, the required purchases in
L L L L L L L L L L
units equals: L
A) budgeted unit sales + beginning merchandise inventory + desired merchandise
L L L L L L L L L L
ending inventory. L
B) budgeted unit sales - beginning merchandise inventory + desired L L L L L L L L L
merchandise ending inventory. L L
C) budgeted unit sales - beginning merchandise inventory - desired merchandise
L L L L L L L L L L
ending inventory. L
D) budgeted unit sales + beginning merchandise inventory - desired merchandise
L L L L L L L L L L
ending inventory. L
23. When preparing a direct materials budget, the required purchases of raw
L L L L L L L L L L L
materials in units equals: L L L
A) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L
inventory of raw materials - beginning inventory of raw materials. L L L L L L L L L
B) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L
of raw materials - beginning inventory of raw materials.
L L L L L L L L
C) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L
of raw materials + beginning inventory of raw materials.
L L L L L L L L
D) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L
inventory of raw materials + beginning inventory of raw materials. L L L L L L L L L
24. Which of the following statements is NOT correct concerning the Manufacturing
L L L L L L L L L L L
Overhead Budget? L
A) The Manufacturing Overhead Budget provides a schedule of all costs of
L L L L L L L L L L L
production other than direct materials and labor costs. L L L L L L L
B) The Manufacturing Overhead Budget shows only the variable portion of
L L L L L L L L L L
manufacturing overhead. L
C) The Manufacturing Overhead Budget shows the expected cash disbursements
L L L L L L L L L
for manufacturing overhead. L L
, Chapter 9 Profit Planning
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
L L L L L L L L L
25. Which of the following statements is NOT correct concerning the Cash Budget?
L L L L L L L L L L L
A) It is not necessary to prepare any other budgets before preparing the Cash
L L L L L L L L L L L L L
Budget.
B) The Cash Budget should be prepared before the Budgeted Income Statement.
L L L L L L L L L L
C) The Cash Budget should be prepared before the Budgeted Balance Sheet.
L L L L L L L L L L
D) The Cash Budget builds on earlier budgets and schedules as well as additional
L L L L L L L L L L L L L
data.
Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L
AICPA FN: Reporting LO: 8 Level: Easy
L L L L
26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the
L L L L L L L L L L L L L L L L
month following sale, and 6% in the second month following sale. The remainder is
L L L L L L L L L L L L L L
uncollectible. Budgeted sales for the next four months are:
L L L L L L L L
January February March April
$300,00
Budgeted sales....... L $200,000 0 $350,000 $250,000
Cash collections in April are budgeted to be:
L L L L L L L
A) $321,000
B) $313,000
C) $320,000
D) $292,000
Ans: B AACSB: Analytic AICPA BB: Critical Thinking
L L L L L L
AICPA FN: Reporting LO: 2
L Level: Easy
L L L
Solution:
April sales ($250,000 × 20%)..............
L L L L $ 50,000
L
March sales ($350,000 × 70%)...........
L L L L 245,000
February sales ($300,000 × 6%).........
L L L L L L18,000
Total.................................................... $313,000
