ACCT 201B Chapter 8 Test Questions All
Solved Correctly 2026/2027 Set.
Master Budget - Answer The master budget communicates management's plans throughout
the organization, allocates resources, and coordinates activities.
What are budgets used for? - Answer planning and control
Planning - Answer involves developing goals and preparing various budgets to achieve those
goals
Control - Answer gathering feedback to ensure plan is properly executed or modified as factors
of change occur
What are budgets/framework - Answer is a detailed quantitative plan for
acquiring and using financial and other resources
over a specified forthcoming time period.
1. A company's budget ordinarily covers a oneyear period corresponding to its fiscal year.
2. Some companies also use a perpetual budget,
which is a 12-month budget that continuously
rolls forward
Why do organizations create budgets - Answer i. Budgets communicate management's plans
throughout the organization.
ii. Budgets force managers to think about and plan for
the future
iii. The budgeting process provides a means of
allocating resources to those parts of the
organization where they can be used most
effectively.
, iv. The budgeting process can uncover potential
bottlenecks before they occur.
v. Budgets coordinate the activities of the entire
organization by integrating the plans of its various
parts.
vi. Budgets define goals and objectives that can serve
as benchmarks for evaluating subsequent
performance.
vii. From a control standpoint, organizations compare
their budgets to actual results to:
1. Improve the efficiency and effectiveness of
operations.
2. Evaluate and reward employees.
How do organizations create budgets - Answer 1. Companies usually create budgets by relying
on some combination of top-down budgeting
and self-imposed budgeting.
2. A self-imposed budget or participative
budget is a budget that is prepared with the full
cooperation and participation of managers at all
levels
Self-imposed budget - Answer 1. A self-imposed budget or participative
budget is a budget that is prepared with the full
cooperation and participation of managers at all
levels. It is a particularly useful approach if the
budget will be used to evaluate managerial
performance.
2. The advantages of self-imposed budgets
include:
Solved Correctly 2026/2027 Set.
Master Budget - Answer The master budget communicates management's plans throughout
the organization, allocates resources, and coordinates activities.
What are budgets used for? - Answer planning and control
Planning - Answer involves developing goals and preparing various budgets to achieve those
goals
Control - Answer gathering feedback to ensure plan is properly executed or modified as factors
of change occur
What are budgets/framework - Answer is a detailed quantitative plan for
acquiring and using financial and other resources
over a specified forthcoming time period.
1. A company's budget ordinarily covers a oneyear period corresponding to its fiscal year.
2. Some companies also use a perpetual budget,
which is a 12-month budget that continuously
rolls forward
Why do organizations create budgets - Answer i. Budgets communicate management's plans
throughout the organization.
ii. Budgets force managers to think about and plan for
the future
iii. The budgeting process provides a means of
allocating resources to those parts of the
organization where they can be used most
effectively.
, iv. The budgeting process can uncover potential
bottlenecks before they occur.
v. Budgets coordinate the activities of the entire
organization by integrating the plans of its various
parts.
vi. Budgets define goals and objectives that can serve
as benchmarks for evaluating subsequent
performance.
vii. From a control standpoint, organizations compare
their budgets to actual results to:
1. Improve the efficiency and effectiveness of
operations.
2. Evaluate and reward employees.
How do organizations create budgets - Answer 1. Companies usually create budgets by relying
on some combination of top-down budgeting
and self-imposed budgeting.
2. A self-imposed budget or participative
budget is a budget that is prepared with the full
cooperation and participation of managers at all
levels
Self-imposed budget - Answer 1. A self-imposed budget or participative
budget is a budget that is prepared with the full
cooperation and participation of managers at all
levels. It is a particularly useful approach if the
budget will be used to evaluate managerial
performance.
2. The advantages of self-imposed budgets
include:
