Chap023 - Chapter 23 Operational Budgeting Chapter 23 Operational Budgeting True False Questions 1 The total quality management approach to budgeting

Chap023 - Chapter 23 Operational Budgeting Chapter 23...

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Chapter 23 - Operational BudgetingChapter 23Operational BudgetingTrue / False Questions1. The total quality management approach to budgeting sets budgeted amounts at levels that can be achieved through reasonably efficient operations. True False2. The typical starting point of a master budget would be to prepare a budgeted balance sheet. True False3. A flexible budget allows management to spend more or less for labor and materials without regard to the amount of production. True False4. A company that is profitable may not have sufficient cash on hand to meet their immediate needs. True False5. In a master budget, the sales forecast would be dependent upon the budgeted production figures. True False6. Flexible budgets can be prepared for sales budgets but not for productions budgets. True False7. In a flexible budget, both variable and fixed costs will vary with the level of activity. True False23-1
Chapter 23 - Operational Budgeting8. The behavioral approach to budgeting has as its goal the complete elimination of inefficiency. True False9. A budget prepared using the total quality management approach is always achievable by departments within a company. True False10. A performance report can be easily adjusted to show budgeted revenues and costs at different levels of activity. True False11. A company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash. True False12. The operating cycle is the average time required to manufacture products for sale. True False13. Because a budget is merely a forecast of future events, its benefits are extremely narrow and limited. True False14. Under the "total quality management" philosophy, budgeted amounts should be set at realistic and achievable levels rather than at levels representing absolute efficiency. True False23-2
Chapter 23 - Operational Budgeting15. If the behavioral approach is employed to determine the levels at which budgeted amounts are set, then reasonable and achievable levels should be used. True False16. A master budget is a comprehensive financial plan setting forth the financial and operational goals of a business. True False17. A master budget actually includes a number of related budgets. True False18. In preparing a master budget, budgeted levels for production, manufacturing costs, and operating expenses normally are determined after preparing the sales forecast. True False19. If the total quality management approach is employed to determine the level at which budgeted amounts are set, then absolute efficiency is assumed. True False20. A cash budget determines the maximum amount of money that can be spent during the period. True False21. The preparation of a budgeted balance sheet requires consideration of the budgeted capital expenditures and budgeted net income.

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