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Unformatted text preview: 1. A budget a. is a substitute for management. b. is an aid to management. c. can operate or enforce itself. d. is the responsibility of the accounting department. 2. Budgeting is usually most closely associated with which management function? a. Planning b. Directing c. Organizing d. Controlling 3. Which of the following items do not follow from the adoption of a budget? a. Promote efficiency b. Deterrent to waste c. Basis for performance evaluation d. Guarantee of accomplishing the profit objective 4. A common starting point in the budgeting process is a. expected future net income. b. past performance. c. to motivate the sales force. d. a clean slate, with no expectations. 5. If budgets are to be effective, there must be a. a history of successful operations b. independent verification of budget goals c. an organizational structure with clearly defined lines of authority and responsibility d. excess plant capacity. 6. It is important that budgets be accepted by a. division managers. b. department heads. c. supervisors. d. all of these. 7. Which of the following statements about budget acceptance in an organization is true? a. The most widely accepted budget by the organization is the one prepared by top management. b. The most widely accepted budget by the organization is the one prepared by the department heads. c. Budgets are hardly ever accepted by anyone except top management. d. Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. Practice Exam.--Page 2 8. An unrealistic budget is more likely to result when it a. has been developed in a top down fashion. b. has been developed in a bottom up fashion. c. has been developed by all levels of management. d. is developed with performance appraisal usages in mind. 9. A budget is most likely to be effective if a. it is used to assess blame when things do not occur according to plans. b. it is not used to evaluate a manager's performance. c. employees and managers at the lower levels do not get involved in the budgeting process. d. it has top management support. 10. In many companies, responsibility for coordinating the preparation of the budget is assigned to a. the company's independent certified public accountants. b. the company's internal auditors. c. the company's board of directors. d. a budget committee. 11. A budget period should be a. monthly: b. for a year or more. c. long-term. d. long enough to provide an obtainable goal under normal business conditions. 12. If a company has adopted continuous budgeting, the budget will show plans for a. every day. b. a full year ahead. c. the current year and the next year. d. at least five years....
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This note was uploaded on 03/22/2011 for the course ACCT 2101 taught by Professor Brooks during the Spring '08 term at LSU.
- Spring '08