ACCT 212 Final Exam Review Questions with Correct Answers Latest Update 2025/2026
budget - Answers a detailed quantitative plan for acquiring an d using financial and other
resources over a specified forthcoming period of time
-the act of preparing a budget is called budgeting
-the use of budgets to control an organization's activities is known as budgetary control
what is the use of budgets to control an organization's activities? - Answers budgetary control
what are some advantages of budgeting? - Answers -it defines goals and objectives
-enables companies to think about and plan for the future
-it is a means of allocating resources
-it enables companies to coordinate activities
-plans can be communicated
what are the two goals of budgeting? how do they differ? - Answers planning and control are the
two goals of budgeting
-planning involves developing goals and preparing various budgets to achieve those goals (plan
for future and effectively allocate resources for those plans)
-control involves the steps taken by management to increase the likelihood that the objectives
set down while planning are attained and that all parts of the organization are working together
towards that goal
(involves comparing the budget with what actually happened to understand why things happen;
gathering feedback to ensure the plan is being executed or modified as circumstances change)
responsibility accounting - Answers an approach that holds managers accountable for those
items - and only those items - that they can actually control to a significant extent; enables
organizations to react quickly to deviations from their plans and to learn from feedback
what are the components of a master budget? - Answers
given that the master budget is based on various estimates and assumptions, what are some
estimates/assumptions that the sales budget requires? - Answers 1. what are the budgeted unit
sales?
2. what is the budgeted selling price per unit?
3. what percentage of accounts receivable will be collected in the current and subsequent
periods?
,what does the production budget tell us? what does it look like? - Answers the production
budget must be adequate to meet budgeted sales and to provide for the desired ending
inventory; used to plan production and paying for production
-ascertains how many units need to be produced to satisfy sales needs and maintain desired
level of finished goods inventory
what does the direct materials budget tell us? - Answers it tells us how much raw materials
need to be purchased for the required level of production and desire level of ending inventory
sales budget and schedule of expected cash collections - Answers -sales budget specifies the
units to be produced; it is the first budget prepared of the master budget
-expected cash collections are based on sales from current and prior periods
expected cash disbursement for materials in the month of sale - Answers amount of materials
purchased x price per lb/amount x percentage paid in month of sale = expected disbursement in
month of sale
direct labor budget - Answers budget that predicts the cost and amount of labor needed for
future period; helps managers predict labor needs and adjust resources accordingly
manufacturing overhead budget - Answers MOH budget is prepared to determine expected cash
disbursements and the POHR for the next period
-cash expenses are separated from noncash expenses (like depreciation) to determine how
much cash is actually disbursed
-we can find manufacturing overhead rate for quarter by doing total OH/total DLHs
ending finished goods inventory budget - Answers a budget that predicts the value of ending
inventory of finished goods in units and dollars
-computed from direct materials, direct labor, and MOH budgets
-essentially computes the cost of each unit and multiplies that by the number of units in ending
inventory to find the balance of ending finished goods inventory
selling and administrative expense budget - Answers A detailed schedule of planned expenses
that will be incurred in areas other than manufacturing during a budget period; consists of fixed
and variable SG&A
-noncash expenses are subtracted from total SG&A to get cash disbursements
how is the cash budget divided up? what does it look like? - Answers it is divided into four main
sections:
, 1. the cash receipts section lists all cash inflows excluding cash received from financing
2. cash disbursements section consists of all cash payments excluding repayments of principal
and interest
3. cash excess or deficiency section determines if the company will need to borrow money or if
it will be able to repay funds previously borrowed
4. financing section details the borrowing and repayments projected to take place during the
budget period
what is the ending cash balance on the cash budget equivalent to? - Answers ending cash
balance of one month is equal to the beginning cash balance of the next month
budgeted income statement - Answers a projection showing how a firm's budgeted sales and
costs will affect expected net income in the firm's next budgeting period
-shows company profit and helps benchmark performance
budgeted balance sheet - Answers shows predicted amounts for the company's assets,
liabilities, and equity as of the end of the budget period
-retained earnings balance = beginning RE + net income - dividends
-balances in PPE are influenced by both previous period balances and the changes budgeted
during the current period
master budget - Answers a summary of the company's plans - a set of interdependent budgets
that set sales targets, production targets, distribution targets, etc.; results in a budgeted income
statement and a budgeted balance sheet
what is the ending accounts receivable balance for the expected cash collections schedule? -
Answers it is the fourth quarter sales x percentage of sales collected in period after sale + third
quarter sales x percentage of sales collected two months after sale (and etc. if applicable.)
for the production budget, how to find beginning inventory for the year and how to find ending
inventory for the year? - Answers NOT THE SUM OF BEG/END INVENTORY FROM ALL
QUARTERS
-beginning inventory for the year = beg inventory from first quarter
-ending inventory for the year = ending inventory from fourth quarter
for the direct materials budget, what is the desired ending raw materials inventory for the year
equal to? - Answers the desired ending raw materials inventory for the last period
what are the steps in the variance analysis cycle? - Answers 1. prepare performance report
budget - Answers a detailed quantitative plan for acquiring an d using financial and other
resources over a specified forthcoming period of time
-the act of preparing a budget is called budgeting
-the use of budgets to control an organization's activities is known as budgetary control
what is the use of budgets to control an organization's activities? - Answers budgetary control
what are some advantages of budgeting? - Answers -it defines goals and objectives
-enables companies to think about and plan for the future
-it is a means of allocating resources
-it enables companies to coordinate activities
-plans can be communicated
what are the two goals of budgeting? how do they differ? - Answers planning and control are the
two goals of budgeting
-planning involves developing goals and preparing various budgets to achieve those goals (plan
for future and effectively allocate resources for those plans)
-control involves the steps taken by management to increase the likelihood that the objectives
set down while planning are attained and that all parts of the organization are working together
towards that goal
(involves comparing the budget with what actually happened to understand why things happen;
gathering feedback to ensure the plan is being executed or modified as circumstances change)
responsibility accounting - Answers an approach that holds managers accountable for those
items - and only those items - that they can actually control to a significant extent; enables
organizations to react quickly to deviations from their plans and to learn from feedback
what are the components of a master budget? - Answers
given that the master budget is based on various estimates and assumptions, what are some
estimates/assumptions that the sales budget requires? - Answers 1. what are the budgeted unit
sales?
2. what is the budgeted selling price per unit?
3. what percentage of accounts receivable will be collected in the current and subsequent
periods?
,what does the production budget tell us? what does it look like? - Answers the production
budget must be adequate to meet budgeted sales and to provide for the desired ending
inventory; used to plan production and paying for production
-ascertains how many units need to be produced to satisfy sales needs and maintain desired
level of finished goods inventory
what does the direct materials budget tell us? - Answers it tells us how much raw materials
need to be purchased for the required level of production and desire level of ending inventory
sales budget and schedule of expected cash collections - Answers -sales budget specifies the
units to be produced; it is the first budget prepared of the master budget
-expected cash collections are based on sales from current and prior periods
expected cash disbursement for materials in the month of sale - Answers amount of materials
purchased x price per lb/amount x percentage paid in month of sale = expected disbursement in
month of sale
direct labor budget - Answers budget that predicts the cost and amount of labor needed for
future period; helps managers predict labor needs and adjust resources accordingly
manufacturing overhead budget - Answers MOH budget is prepared to determine expected cash
disbursements and the POHR for the next period
-cash expenses are separated from noncash expenses (like depreciation) to determine how
much cash is actually disbursed
-we can find manufacturing overhead rate for quarter by doing total OH/total DLHs
ending finished goods inventory budget - Answers a budget that predicts the value of ending
inventory of finished goods in units and dollars
-computed from direct materials, direct labor, and MOH budgets
-essentially computes the cost of each unit and multiplies that by the number of units in ending
inventory to find the balance of ending finished goods inventory
selling and administrative expense budget - Answers A detailed schedule of planned expenses
that will be incurred in areas other than manufacturing during a budget period; consists of fixed
and variable SG&A
-noncash expenses are subtracted from total SG&A to get cash disbursements
how is the cash budget divided up? what does it look like? - Answers it is divided into four main
sections:
, 1. the cash receipts section lists all cash inflows excluding cash received from financing
2. cash disbursements section consists of all cash payments excluding repayments of principal
and interest
3. cash excess or deficiency section determines if the company will need to borrow money or if
it will be able to repay funds previously borrowed
4. financing section details the borrowing and repayments projected to take place during the
budget period
what is the ending cash balance on the cash budget equivalent to? - Answers ending cash
balance of one month is equal to the beginning cash balance of the next month
budgeted income statement - Answers a projection showing how a firm's budgeted sales and
costs will affect expected net income in the firm's next budgeting period
-shows company profit and helps benchmark performance
budgeted balance sheet - Answers shows predicted amounts for the company's assets,
liabilities, and equity as of the end of the budget period
-retained earnings balance = beginning RE + net income - dividends
-balances in PPE are influenced by both previous period balances and the changes budgeted
during the current period
master budget - Answers a summary of the company's plans - a set of interdependent budgets
that set sales targets, production targets, distribution targets, etc.; results in a budgeted income
statement and a budgeted balance sheet
what is the ending accounts receivable balance for the expected cash collections schedule? -
Answers it is the fourth quarter sales x percentage of sales collected in period after sale + third
quarter sales x percentage of sales collected two months after sale (and etc. if applicable.)
for the production budget, how to find beginning inventory for the year and how to find ending
inventory for the year? - Answers NOT THE SUM OF BEG/END INVENTORY FROM ALL
QUARTERS
-beginning inventory for the year = beg inventory from first quarter
-ending inventory for the year = ending inventory from fourth quarter
for the direct materials budget, what is the desired ending raw materials inventory for the year
equal to? - Answers the desired ending raw materials inventory for the last period
what are the steps in the variance analysis cycle? - Answers 1. prepare performance report
