ch07 - CHAPTER 7 OPERATING BUDGETS BRIDGING PLANNING AND...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CHAPTER 7 OPERATING BUDGETS: BRIDGING PLANNING AND CONTROL TRUE/FALSE 1. Multi-year budgets are strategic plans that specify the direction in which a company desires to head. LO1 – True 2. Strategic budgets bridge short-term decisions and long-term plans. LO1 – False Operating budgets bridge short-term decisions and long-term plans. 3. Financial budgets quantify the outcomes of operating budgets in summary financial statements. LO1 – True 4. In a centralized decision-making environment, the manager delegates decision making to individuals with relevant experience and knowledge. LO1 – False In a decentralized decision-making environment, the manager delegates decision making to individuals with relevant experience and knowledge. 5. Many firms use cross-functional teams that include employees from several departments to prepare the budget. LO1 – True 6. The first step in preparing a master budget is to prepare the revenue budget. LO2 – True 7. Little time is spent in preparing the revenue budget, as its accuracy is not as crucial as budgets involving costs. LO2 – False Firms spend considerable time and effort in preparing a revenue budget, as its accuracy is crucial in putting together a good master budget. 8. The production budget combines the demand information provided by the revenue budget and the company’s inventory policy regarding finished goods to determine production levels in the coming period. LO2 – True 7-1 9. The purchasing and production managers coordinate closely to prepare the materials usage budget because it requires both price and quantity estimates. LO2 – True 10. The variable cost of goods manufactured is the sum of several cost items: material, labor, variable overhead, and variable selling and administrative expenses. LO2 – False The variable cost of goods manufactured is the sum of several cost items: materials, labor, and variable overhead. 11. Effective working capital management can save companies money in terms of interest payments on costly short-term loans. LO3 – True 7-2 Operating Budgets: Bridging Planning and Control 12. In preparing a cash budget, from an accounting record-keeping perspective there is no need to adjust the balance of accounts receivable and reported income to reflect the uncollectible debt. LO3 – False From an accounting record-keeping perspective, we need to adjust the balance of accounts receivable and reported income to reflect the uncollectible debt....
View Full Document

{[ snackBarMessage ]}

Page1 / 41

ch07 - CHAPTER 7 OPERATING BUDGETS BRIDGING PLANNING AND...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online