Taking Practice Exam 2

Taking Practice - Practice Exam 2 1 The master budget consists of various types of budgets within it Which of the following represents the correct

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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 Cash sales 95,000 108,000 87,000 June receivables 81,750 16,350 10,900 July receivables 21,750 4,350 August receivables 56,250 Total 176,750 146,100 147,600 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 second 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
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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 Sept. Rec. 24,500 66,640 Oct. Rec. 10,500 28,560 Nov. Rec. 2,250 6,120 Dec. Rec. 2,175 9,000 – 2,250 = 6,750 42,000 – 10,500 – 28,560 = 2,940 6,750 + 2,940 = 9,690 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. 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 Current Sales 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter A 298,000 312,900 328,545 344,972.25 362,330.86 B 427,000 444,080 461,843.20 480,316.92 499,295.90 C 195,400 209,078 223,713.46 239,373.40 256,129.53 D 398,043 437,847.30 481,632.03 529,795.23 582,774.75 Sales Revenue 1,594,457.70
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7. Many companies use _________________ covering a twelve month reporting period.
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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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Taking Practice - Practice Exam 2 1 The master budget consists of various types of budgets within it Which of the following represents the correct

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