ACCOUNTING FINAL EXAM –
BUDGETING WITH COMPLETE
SOLUTIONS
What ndo nbudgets ninvolve? n- ncorrect nanswers n-Planning n- nEstablishing nspecific
ngoals
Directing n- nExecuting nplans nto nachieve ngoals
Controlling n- nComparing nresults nwith ngoals
Purpose nof nindividual's nbudgets n- ncorrect nanswers n-Utilizing nincome nfor nliving,
ngiving, nsaving, nretirement, netc..
Purpose nof nbusiness' nbudgets n- ncorrect nanswers n-Profit nmaximization, nexpansion,
nsustainability, nand nother ngoals
Purpose nof ngovt's nbudgets n- ncorrect nanswers n-Tax nallocation nand nhelp nto
neconomy
, Purpose nof nnonprofit's nbudgets n- ncorrect nanswers n-Meeting nthe nobjectives nand
npurpose nof nphilanthropic nventure
Advantages nof nbudgeting n- ncorrect nanswers n-•Encourages nthoughtfulness nin nthe
nuse nand nallocation nof
resources
•Promotes ncollaboration nacross ndepartments nfor ncorporate ngoals
•Assigns nresponsibility nand naccountability nto nvarious ndepartments
•Provides na nbenchmark nfor nperformance nmeasurement
Ineffective nbudgets n- ncorrect nanswers n-too nslack n- n"use nit nor nlose nit" nmentality
too nrestrictive n- ncannot nadapt nto nchanges n(employees/managers nbecome
ndiscouraged)
Unused n- nnot nused nby norganization
Conflicting ngoals n- nDoes nnot ninclude ninput nfrom nall nparties n(mgmt ngoals ndiffer
nfrom nemployees)
Budget nEstimates: nContinuous nbudgeting n- ncorrect nanswers n-Budgets nare
nprojected n12 nmonths ninto nthe nfuture, nafter neach nmonth, na nnew nmonth nis nadded
nto nmaintain n12 nmonths nof nfuture npredictions
Budget nperiods: nfiscal-year n- ncorrect nanswers n-12-month nperiod nthat nan
norganization nuses nto nreport nits nfinances
Budget nestimates: nzero-based nbudgeting n- ncorrect nanswers n-managers nbase
nbudgets non nrevenue nand nexpenses nfor na nperiod; nbudget nrequests nmust nbe
njustified n(starts nfrom nzero)
Master nbudget n- ncorrect nanswers n-the ncompilation nof nall nthe nbudgets/schedules
nprepared nin nplanning nfor nthe nrevenue nconversion nand nexpenditure nprocesses
Budgeted nIncome nStatement n- ncorrect nanswers n-Made nup nof nindividual nbudgets
n(standards) nfor nsales, ncost nof ngoods nsold, nselling nand nadministrative nexpenses
n(Projected nRevenue n- nProjected nExpenses n= nProjected nNet nIncome)
Budgeted nBalance nSheet n- ncorrect nanswers n-Made nup nof nindividual nbudgets
n(standards) nfor ncapital nexpenditures nand ndebt n(Projected nAssets n= nProjected
nLiabilities n+ nProjected nEquity)
What nare nthe ntwo nbudget nformats? n- ncorrect nanswers n-Static nand nFlexible
Static nbudget nformat n- ncorrect nanswers n-Projected nrevenues nand nexpenses nfor
none nactivity n(con n= ndoes nnot nadjust nfor nchanges nin nactivity nlevels)
Flexible nbudget nformat n- ncorrect nanswers n-Projected nrevenue nand nexpenses nfor
nseveral npossible nactivity nlevels
BUDGETING WITH COMPLETE
SOLUTIONS
What ndo nbudgets ninvolve? n- ncorrect nanswers n-Planning n- nEstablishing nspecific
ngoals
Directing n- nExecuting nplans nto nachieve ngoals
Controlling n- nComparing nresults nwith ngoals
Purpose nof nindividual's nbudgets n- ncorrect nanswers n-Utilizing nincome nfor nliving,
ngiving, nsaving, nretirement, netc..
Purpose nof nbusiness' nbudgets n- ncorrect nanswers n-Profit nmaximization, nexpansion,
nsustainability, nand nother ngoals
Purpose nof ngovt's nbudgets n- ncorrect nanswers n-Tax nallocation nand nhelp nto
neconomy
, Purpose nof nnonprofit's nbudgets n- ncorrect nanswers n-Meeting nthe nobjectives nand
npurpose nof nphilanthropic nventure
Advantages nof nbudgeting n- ncorrect nanswers n-•Encourages nthoughtfulness nin nthe
nuse nand nallocation nof
resources
•Promotes ncollaboration nacross ndepartments nfor ncorporate ngoals
•Assigns nresponsibility nand naccountability nto nvarious ndepartments
•Provides na nbenchmark nfor nperformance nmeasurement
Ineffective nbudgets n- ncorrect nanswers n-too nslack n- n"use nit nor nlose nit" nmentality
too nrestrictive n- ncannot nadapt nto nchanges n(employees/managers nbecome
ndiscouraged)
Unused n- nnot nused nby norganization
Conflicting ngoals n- nDoes nnot ninclude ninput nfrom nall nparties n(mgmt ngoals ndiffer
nfrom nemployees)
Budget nEstimates: nContinuous nbudgeting n- ncorrect nanswers n-Budgets nare
nprojected n12 nmonths ninto nthe nfuture, nafter neach nmonth, na nnew nmonth nis nadded
nto nmaintain n12 nmonths nof nfuture npredictions
Budget nperiods: nfiscal-year n- ncorrect nanswers n-12-month nperiod nthat nan
norganization nuses nto nreport nits nfinances
Budget nestimates: nzero-based nbudgeting n- ncorrect nanswers n-managers nbase
nbudgets non nrevenue nand nexpenses nfor na nperiod; nbudget nrequests nmust nbe
njustified n(starts nfrom nzero)
Master nbudget n- ncorrect nanswers n-the ncompilation nof nall nthe nbudgets/schedules
nprepared nin nplanning nfor nthe nrevenue nconversion nand nexpenditure nprocesses
Budgeted nIncome nStatement n- ncorrect nanswers n-Made nup nof nindividual nbudgets
n(standards) nfor nsales, ncost nof ngoods nsold, nselling nand nadministrative nexpenses
n(Projected nRevenue n- nProjected nExpenses n= nProjected nNet nIncome)
Budgeted nBalance nSheet n- ncorrect nanswers n-Made nup nof nindividual nbudgets
n(standards) nfor ncapital nexpenditures nand ndebt n(Projected nAssets n= nProjected
nLiabilities n+ nProjected nEquity)
What nare nthe ntwo nbudget nformats? n- ncorrect nanswers n-Static nand nFlexible
Static nbudget nformat n- ncorrect nanswers n-Projected nrevenues nand nexpenses nfor
none nactivity n(con n= ndoes nnot nadjust nfor nchanges nin nactivity nlevels)
Flexible nbudget nformat n- ncorrect nanswers n-Projected nrevenue nand nexpenses nfor
nseveral npossible nactivity nlevels
