Practice Exam 2

Practice Exam 2 - Practice Exam 2 1. The master budget...

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Practice Exam 2 1. The master budget consists of various types of budgets within it. Which of the following represents the correct order of budgets within the master budget? a.) Sales, purchases, cash b.) Sales, selling and administrative, purchases c.) Purchases, cash, sales d.) Balance sheet, purchases, sales 2. The budget that portrays twelve months of operations is the: a.) perpetual b.) participative c.) capital d.) operating 3. Eastern Carolina Corporation is a merchandising firm. Information pertaining to the company’s sales revenue is presented in the following table: (Actual) (Budget) (Budget) June July August Cash sales $95,000 $108,000 $87,000 Credit sales $109,000 $29,000 $75,000 Total sales $204,000 $137,000 $162,000 All purchases of inventory are on account; 38% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Management estimates that 75% of credit sales will be collected in the month of sale, 15% will be collected in the month following the sale, and the remainder to be written-off in the month following the sale. Required purchases are equal to 45% of the next month’s total sales. Eastern Carolina’s budgeted total cash receipts for August are a.) $147,600 b.) $87,000 c.) $143,250 d.) $56,250 4. Frankie’s Amazing Hotdogs has the following budgeted sales: September October November December Cash Sales $25,000 $38,000 $50,000 $20,000 Credit Sales $98,000 $42,000 $9,000 $8,700 The regular pattern of collection of credit sales is 25% in the month of sale, 68% in the month following the sale, and the remainder in the second month following the month of sale.
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The budgeted accounts receivable balance on November 30 th would be a.) $6,750 b.) $2,940 c.) $10,690 d.) $9,690 5. ________________focuses on intermediate range planning. It involves such decisions as whether to buy or lease equipment, whether to stimulate sales, or whether to increase the company’s base asset. a.) Cash budgeting b.) Capital budgeting c.) Strategic planning d.) Continuous (perpetual) budgeting 6. Academy Amnesty International, Inc. has four subsidiaries: Subsidiary A, B, C, and D. Because the subsidiaries operate in different industries, Academy’s corporate budget for the coming year must reflect the different growth potentials of the individual industries. The growth expectations per quarter for the subsidiaries are 5% for A, 4% for B, 7% for C, and 10% for D. Subsidiary A, B, C, and D have the following current sales, respectively: $298,000, $427,000, $195,400, and $398,043. The amount of sales revenue Academy will report on the third quarter pro forma income statement is: a.) $1,403,905.30 b.) $1,495,733.69 c.) $1,594,457.81 d.) $1,700,654.77 7. Many companies use _________________ covering a twelve month reporting period. As the current month draws to a close, an additional month is added at the end of the
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This note was uploaded on 04/07/2008 for the course ACCT 202 taught by Professor Wessels during the Spring '06 term at Clemson.

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Practice Exam 2 - Practice Exam 2 1. The master budget...

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