ACCT 212 Final Exam Review questions |\ |\ |\ |\ |\ |\
with answers |\
budget - CORRECT 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?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
- CORRECT ANSWERS ✔✔budgetary control
|\ |\ |\ |\ |\
what are some advantages of budgeting? - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 - CORRECT 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? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔ |\
given that the master budget is based on various estimates and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
assumptions, what are some estimates/assumptions that the |\ |\ |\ |\ |\ |\ |\
sales budget requires? - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
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 -
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 |\ |\ |\ |\ |\ |\ |\
with answers |\
budget - CORRECT 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?
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
- CORRECT ANSWERS ✔✔budgetary control
|\ |\ |\ |\ |\
what are some advantages of budgeting? - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 - CORRECT 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? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔ |\
given that the master budget is based on various estimates and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
assumptions, what are some estimates/assumptions that the |\ |\ |\ |\ |\ |\ |\
sales budget requires? - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
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 -
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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? -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT 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 |\ |\ |\ |\ |\ |\ |\
