KA2e_SelfStudy_Ch20

KA2e_SelfStudy_Ch20 - File:ch20,Chapter20:BudgetaryPlanning...

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File: ch20, Chapter 20: Budgetary Planning Multiple Choice 1. Which of the following is not a benefit of budgeting? a) Management can plan ahead. b) An early warning system is provided for potential problems. c) It enables disciplinary action to be taken at every level of responsibility. d) The coordination of activities is facilitated. Ans: c Response A: This is one of the benefits of budgeting. Response B: This is one of the benefits of budgeting. Response C: Correct! Budgeting does not necessarily enable disciplinary action to be taken at every level of responsibility. Response D: This is one of the benefits of budgeting. 2. The essentials of effective budgeting do not include: a) top-down budgeting. b) management acceptance. c) research and analysis. d) sound organizational structure. Ans: a Response A: Correct! Top-down budgeting is NOT one of the essentials of effective budgeting. Response B: This is one of the essentials of effective budgeting. Response C: This is one of the essentials of effective budgeting. Response D: This is one of the essentials of effective budgeting. 3. Compared to budgeting, long-range planning generally has the: a) same amount of detail. b) longer time period. c) same emphasis. d) same time period. Ans: b Response A: Budgeting and long-range planning do not have the same amount of detail. Response B: Correct! Long-range planning generally encompasses a five-year period whereas budgeting usually covers a period of a year. Response C: Budgeting and long-range planning do not have the same emphasis. Response D: Budgeting and long-range planning do not cover the same time period. 4. A sales budget is: a) derived from the production budget. b) management’s best estimate of sales revenue for the year. c) not the starting point for the master budget. d) prepared only for credit sales.
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Ans: b Response A: The sales budget is the first budget prepared and is the one budget that is not derived from any other budget. Response B: Correct! This is an accurate description of the sales budget.
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This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch20 - File:ch20,Chapter20:BudgetaryPlanning...

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