Chapter 09 - Chapter 9 Profit Planning True/False Questions...

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Unformatted text preview: Chapter 9 Profit Planning True/False Questions 1. The usual starting point in budgeting is to make a forecast of net income. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1,9 Level: Easy 2. A budget committee helps provide consistency in the budgeting process because it prepares all of the budgets for the various segments of the organization. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3. A continuous or perpetual budget is one which covers a 12-month period but which is constantly adding a new month on the end as the current month is completed. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 4. Control involves developing objectives and preparing the various budgets to achieve those objectives. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 5. A self-imposed budget is one prepared by top management and passed downward through an organization. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 6. When using the self-imposed budget approach, it is generally best for top management to accept all budget estimates without question in order to minimize adverse behavioral responses from employees. Ans: False AACSB: Reflective Thinking AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 9-5 Chapter 9 Profit Planning 7. Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 8. In a production budget, if the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, then the expected number of units sold is greater than the number of units to be produced during the period. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium 9. In a merchandising company, the required merchandise purchases for a period are determined by subtracting the units in beginning inventory from the sum of the units to be sold during the period and the desired ending inventory. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 10. The direct materials to be purchased for a period can be obtained by subtracting the desired ending inventory of direct materials from the total direct materials needed for the period....
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This note was uploaded on 11/21/2009 for the course ACC 2134 taught by Professor Ronwood during the Spring '09 term at Nashville State Community College.

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Chapter 09 - Chapter 9 Profit Planning True/False Questions...

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