CHAPTER 9 BUDGETING QUESTIONS AND ANSWERS | CH 9 BUDGETING STUDY
GUIDE & PRACTICE TEST 2026/2027
Know the purpose(s) of a budget - ✔✔is a formal written statement of management's plans for a
specified future time period, expressed in financial terms.
Benefits of Budgeting - ✔✔1. all management is require to PLAN AHEAD
2. provides DEFINITE OBJECTIVES
3. Creates an EARLY WARNING SYSTEM
4. facilitates COORDINATION OF ACTIVITIES
5. results in greater MANAGEMENT AWARENESS
6. MOTIVATES PERSONNEL
Accounting is responsible for in terms of budgeting - ✔✔setting standards of performance and
providing feedback by means of variance reports, the accountant supplies much of the fundamental
information required for overall planning
A common starting point in the budgeting process is - ✔✔sales budget
factors that enhance the effectiveness of a budget - ✔✔Effective budgeting depends on a sound
organizational structure. In such a structure, authority and responsibility for all phases of operations are
clearly defined. Budgets based on research and analysis are more likely to result in realistic goals that will
contribute to the growth and profitability of a company.
how to achieve budget acceptance in an organization - ✔✔Budgets based on research and analysis are
more likely to result in realistic goals that will contribute to the growth and profitability of a company.
And, the effectiveness of a budget program is directly related to its acceptance by all levels of
management.
Define Master Budget - ✔✔A set of interrelated budgets that constitutes a plan of action for a specific
time period.
2 classes of budgets in master budget - ✔✔operating and financial
What order are the budgets prepared in the master budget. - ✔✔The company first develops the
operating budgets, beginning with the sales budget. Then, it prepares the financial budgets.
- sales budget
-production budget
- DM Bud > DL Bud> MOH bud
- selling and admin expens bud
- budget income statement
- capit exped bud> cash bud> Bud balance sheet
sales forecast - ✔✔The projection of potential sales for the industry and the company's expected share
of such sales
GUIDE & PRACTICE TEST 2026/2027
Know the purpose(s) of a budget - ✔✔is a formal written statement of management's plans for a
specified future time period, expressed in financial terms.
Benefits of Budgeting - ✔✔1. all management is require to PLAN AHEAD
2. provides DEFINITE OBJECTIVES
3. Creates an EARLY WARNING SYSTEM
4. facilitates COORDINATION OF ACTIVITIES
5. results in greater MANAGEMENT AWARENESS
6. MOTIVATES PERSONNEL
Accounting is responsible for in terms of budgeting - ✔✔setting standards of performance and
providing feedback by means of variance reports, the accountant supplies much of the fundamental
information required for overall planning
A common starting point in the budgeting process is - ✔✔sales budget
factors that enhance the effectiveness of a budget - ✔✔Effective budgeting depends on a sound
organizational structure. In such a structure, authority and responsibility for all phases of operations are
clearly defined. Budgets based on research and analysis are more likely to result in realistic goals that will
contribute to the growth and profitability of a company.
how to achieve budget acceptance in an organization - ✔✔Budgets based on research and analysis are
more likely to result in realistic goals that will contribute to the growth and profitability of a company.
And, the effectiveness of a budget program is directly related to its acceptance by all levels of
management.
Define Master Budget - ✔✔A set of interrelated budgets that constitutes a plan of action for a specific
time period.
2 classes of budgets in master budget - ✔✔operating and financial
What order are the budgets prepared in the master budget. - ✔✔The company first develops the
operating budgets, beginning with the sales budget. Then, it prepares the financial budgets.
- sales budget
-production budget
- DM Bud > DL Bud> MOH bud
- selling and admin expens bud
- budget income statement
- capit exped bud> cash bud> Bud balance sheet
sales forecast - ✔✔The projection of potential sales for the industry and the company's expected share
of such sales
