Chapter 9 - test bank of managerial accounting book PDF

Preview

Summary

test bank of managerial accounting book ...

Description

CHAPTER 9 BUDGETARY PLANNING SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY I t e m

L O

BT I t e m

L O

BT I t e m

L O

BT

I t e m

L O

BT

I t e m

L O

BT

K C C K C C K K

33. 34. sg 35. sg 36.

3 3 5 6

K K K C

True-False Statements 1. 2. 3. 4. 5. 6. 7. 8.

1 1 1 1 1 1 2 2

K C C C C K K K

9. 10. 11. 12. 13. 14. 15. 16.

2 2 2 2 2 2 2 3

C C C C K K C K

17. 18. 19. 20. 21. 22. 23. 24.

37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61.

1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

K K K C C C K C C C C C C C C K K K K K K K C C AP

62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86.

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

K AP C C K C C C K C AN C K K AP AP AP AP AP AP AP C C K C

87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111.

159. 160.

3 3

AP AP

161. 162.

3 3

AP AP

163. 164.

3 3 3 3 3 3 3 3

K C C C C K C C

25. 26. 27. 28. 29. 30. sg 31. sg 32.

4 5 5 6 6 6 1 2

sg

sg

Multiple Choice Questions 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 5 3 5 4 4 4 5 5

C AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP AP C K AP AP

112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 136.

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

AP C K C K C K AP AP K AP K C AP C AP AP AP AP AP AP AP AP AP AP

137. 138. 139. 140. 141. 142. 143. 144. 145. 146. st 147. sg 148. st 149. sg 150. st 151. sg 152. st 153. sg 154. st 155. sg 156. sg 157. sg 158.

6 6 6 6 6 6 6 6 6 6 1 1 2 2 3 3 4 5 5 5 6 6

C K C C C C C C C C K K K K K AP K AP K AP K K

165. 166.

5 5

AP AP

167. 168.

5 5

AP AP

Brief Exercises

sg st

5 5

AP AP

This question also appears in the Study Guide. This question also appears in a self-test at the student companion website.

9-2

Test Bank for Managerial Accounting, Sixth Edition

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Exercises 169. 170. 171. 172. 173. 174.

3 3 3 3 3 3

AP AP AP AP AP AP

175. 176. 177. 178. 179. 180.

3 3 3 3 3 3

AP AP C AP AP AP

181. 182. 183. 184. 185. 186.

3,4 4 4 5 5 5

AP AP AP AP AP AP

187. 188. 189. 190. 191. 192.

5 5 5 5 5 5

AP C AP AP AP AP

3 5 6

K K K

193. 194. 195.

5,6 6 6

AP AP C

Completion Statements 196. 197. 198.

1 1 2

K K K

208.

1

K

199. 200. 201.

2 2 2

K K K

202. 203. 204.

2 3 3

K K K

205. 206. 207.

Matching Short-Answer Essay 209. 210.

1 1

K K

211. 212.

3 2

K K

213. 214.

3 3

K K

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE I t e m T y p e I t e m

T y p e I t e m

T y p e I t e m

T y p e I t e m

1. 2. 3.

TF TF TF

4. 5. 6.

TF TF TF

31. 37. 38.

7. 8. 9. 10. 11. 12.

TF TF TF TF TF TF

13. 14. 15. 32. 43. 44.

TF TF TF TF MC MC

45. 46. 47. 48. 49. 50.

Learning Objective 1 TF 39. MC 42. MC 40. MC 147. MC 41. MC 148. Learning Objective 2 MC 51. MC 57. MC 52. MC 58. MC 53. MC 59. MC 54. MC 60. MC 55. MC 61. MC 56. MC 149.

75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86.

Learning Objective 3 MC 87. MC 99. MC 88. MC 100. MC 89. MC 101. MC 90. MC 102. MC 91. MC 103. MC 92. MC 151. MC 93. MC 152. MC 94. MC 159. MC 95. MC 160. MC 96. MC 161. MC 97. MC 162. MC 98. MC 169.

16. 17. 18. 19. 20. 21. 22. 23. 24. 33. 34. 62.

TF TF TF TF TF TF TF TF TF TF TF MC

63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74.

MC MC MC MC MC MC MC MC MC MC MC MC

T y p e I t e m

T y pe I t e m

T y p e

209.

SA

203. 204. 205. 210. 213. 214.

C C C SA SA SA

MC MC MC

196. 197. 208.

C C Ma

MC MC MC MC MC MC

150. 198. 199. 200. 201. 202.

MC C C C C C

MC MC MC MC MC MC MC BE BE BE BE Ex

170. 171. 172. 173. 174. 175. 176. 177. 178. 179. 180. 181.

Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex Ex

FOR INSTRUCTOR USE ONLY

Budgetary Planning

25. 107.

TF MC

108. 109.

MC MC

153. 181.

26. 27. 35. 104. 106. 110. 111. 112.

TF TF TF MC MC MC MC MC

113. 114. 115. 116. 117. 118. 119. 120.

MC MC MC MC MC MC MC MC

121. 122. 123. 124. 125. 126. 127. 128.

Learning Objective 4 MC 182. Ex Ex 183. Ex Learning Objective 5 MC 129. MC 154. MC 130. MC 155. MC 131. MC 156. MC 132. MC 163. MC 133. MC 164. MC 134. MC 165. MC 135. MC 166. MC 136. MC 167.

139. 140. 141.

Learning Objective 6 MC 142. MC 145. MC 143. MC 146. MC 144. MC 157.

28. 29. 30.

TF TF TF

36. 137. 138.

TF MC MC

Note: TF = True-False MC = Multiple Choice SA = Short-Answer Essay

BE = Brief Exercise Ex = Exercise

9-3

MC MC MC BE BE BE BE BE

168. 182. 183. 184. 185. 186. 187. 188.

BE Ex Ex Ex Ex Ex Ex Ex

189. 190. 191. 192. 193. 206.

Ex Ex Ex Ex Ex C

MC MC MC

158. MC 193. Ex 194. Ex

195. 207.

Ex C

C = Completion Ma = Matching

CHAPTER LEARNING OBJECTIVES 1. Identify the benefits of budgeting. The primary advantages of budgeting are that it (a) requires management to plan ahead, (b) provides definite objectives for evaluating performance, (c) creates an early warning system for potential problems, (d) facilitates coordination of activities, (e) results in greater management awareness, and (f) motivates personnel to meet planned objectives. 2. State the essentials of effective budgeting. The essentials of effective budgeting are (a) sound organizational structure, (b) research and analysis, and (c) acceptance by all levels of management. 3. Identify the budgets that comprise the master budget. The master budget consists of the following budgets: (a) sales, (b) production, (c) direct materials, (d) direct labor, (e) manufacturing overhead, (f) selling and administrative expense, (g) budgeted income statement, (h) capital expenditure budget, (i) cash budget, and (j) budgeted balance sheet. 4. Describe the sources for preparing the budgeted income statement. The budgeted income statement is prepared from (a) the sales budget, (b) the budgets for direct materials, direct labor, and manufacturing overhead, and (c) the selling and administrative expense budget. 5. Explain the principal sections of a cash budget. The cash budget has three sections (receipts, disbursements, and financing) and the beginning and ending cash balances. 6. Indicate the applicability of budgeting in nonmanufacturing companies. Budgeting may be used by merchandisers for development of a merchandise purchases budget. In service companies budgeting is a critical factor in coordinating staff needs with anticipated services. In not-for-profit organizations, the starting point in budgeting is usually expenditures, not receipts. FOR INSTRUCTOR USE ONLY

9-4

Test Bank for Managerial Accounting, Sixth Edition

TRUE-FALSE STATEMENTS 1.

Budgets are statements of management's plans stated in financial terms.

Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

2.

A benefit of budgeting is that it provides definite objectives for evaluating performance.

Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

3.

A budget can be a means of communicating a company's objectives to external parties.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

4.

A budget can be used as a basis for evaluating performance.

Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

5.

A well-developed budget can operate and enforce itself.

Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

6.

The budget itself and the administration of the budget are the responsibility of the accounting department.

Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

7.

Effective budgeting requires clearly defined lines of authority and responsibility.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Business Economics

8.

The flow of input data for budgeting should be from the highest levels of responsibility to the lowest.

Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Budget Preparation

9.

Budgets can have a positive or negative effect on human behavior depending on the manner in which the budget is developed and administered.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Management, AICPA PC: Interaction, IMA: Performance Measurement

10.

A budget can facilitate the coordination of activities among the segments of a large company.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Budget Preparation

11.

The longer the budget period, the more reliable the estimates of future outcomes.

Ans: F, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Budget Preparation

12.

The budget committee has the responsibility for coordinating the preparation of the budget.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Leadership, IMA: Budget Preparation

13.

The budget is developed within the framework of a sales forecast.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

FOR INSTRUCTOR USE ONLY

Budgetary Planning 14.

9-5

Budgeting and long-range planning are two terms that describe the same process.

Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

15.

Long-range plans are used more as a review of progress toward long-term goals rather than an evaluation of specific results to be achieved.

Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

16.

The master budget reflects management's long-term plans encompassing five years or more.

Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

17.

The master budget consists of operating and financial budgets.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

18.

Financial budgets must be completed before the operating budgets can be prepared.

Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

19.

The direct materials budget must be completed before the production budget because the quantity of materials available for production must be known.

Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

20.

The number of direct labor hours needed for production is obtained from the production budget.

Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

21.

A manufacturing overhead budget is not needed if the company develops a predetermined overhead rate to apply overhead.

Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

22.

The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs.

Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

23.

A production budget should be prepared before the sales budget.

Ans: F, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

24.

The direct materials budget contains both quantity and cost data.

Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

25.

The budgeted income statement indicates the expected profitability of operations for the next year.

Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

FOR INSTRUCTOR USE ONLY

9-6 26.

Test Bank for Managerial Accounting, Sixth Edition If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.

Ans: F, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

27.

The budgeted balance sheet is prepared entirely from the budgets for the current year.

Ans: F, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

28.

The starting point when budgeting for a not-for-profit organization is generally to budget expenditures first.

Ans: T, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

29.

A merchandiser has a merchandise purchases budget rather than a production budget.

Ans: T, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

30.

A critical factor in budgeting for a service firm is to determine the amount of products to purchase.

Ans: F, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

31.

The budget itself and the administration of the budget are entirely accounting responsibilities.

Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

32.

Financial planning models and statistical and mathematical techniques may be used in forecasting sales.

Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Strategic/Critical Thinking, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

33.

The direct materials budget is derived from the direct materials units required for production plus desired ending direct materials units less beginning direct materials units.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

34.

The manufacturing overhead budget shows the expected manufacturing overhead costs.

Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

35.

In order to develop a budgeted balance sheet, the previous year's balance sheet is needed.

Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

36.

In service enterprises, the critical factor in budgeting is coordinating materials and equipment with anticipated services.

Ans: F, LO: 6, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FN: Decision Modeling, AICPA PC: Problem Solving, IMA: Budget Preparation

FOR INSTRUCTOR USE ONLY

Budgetary Planning

9-7

Answers to True-False Statements Item

1....