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ch23 Key

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66. 65. 72. 53. 52. 39. 62. FALSE C A E D E E A D D C B D E C A C A E B D B D A A A B B E D D C C C C D B B . 40. 63. 42. 71. slides. 59. 60. 49. 56. 44. 68. 57. 61.blogspot.blogspot. 58. slides. 38. SM and and TB visit: visit: htp:/donloadslide. 43. 73. ebooks. 55. 41. 64.o To donload download ore more ebooks. 46. 51. 67. 74. 47. 54. 48. 69. 70. 50.com 37. 45.co http://downloadslide.

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usually the starting point in the budgeting process. including analysis and research.113. and Rolling budgets :: A new set of budgets added to replace the ones that have lapsed as each budget period goes by. usually expressed in monetary terms. the merchandise or materials to be purchased. (3) Budgeting provides a basis for evaluating performance. (6) Budgeting serves as a means of communicating plans and instructions. and Cash budget:: A plan that shows the expected cash inflows and outflows during the budget period. 121. (4) Budgeting can be used as a motivator if applied correctly. and Continuous budgeting:: The practice of preparing budgets for a selected number of several periods and revising those budgets as each period is completed. and Safety stock :: A quantity of inventory or materials over the minimum to reduce the risk of running short. C 117. D 119. including receipts from loans needed to maintain a minimum cash balance and repayments of such loans. and Sales budget:: A plan showing the units of goods to be sold and the sales to be derived. the usual starting point in the budgeting process. (1) Budgeting promotes good decision-making processes. A 116. and the amounts of cash to be borrowed or loans to be repaid. Merchandise purchases budget :: A plan that shows the units or costs of merchandise to be purchased by a merchandising company during the budget period. and Budget :: A formal statement of future plans. B 118. and Manufacturing budget :: plan that shows the predicted costs for direct materials. and equity as of the end of the budget period. and Cash budget :: A plan that shows the expected cash inflows and cash outflows during the budget period. and General and administrative expense budget :: A plan that shows predicted operating expenses not included in the selling expenses budget. and Sales budget :: A plan showing the units of goods to be sold and the sales to be derived. the long-term assets to be purchased. and Master budget:: A comprehensive business plan that includes specific plans for expected sales. and Budgeted balance sheet:: An accounting report that presents predicted amounts of the company's assets. (5) Budgeting provides a means of coordinating business activities. the units of product to be produced. direct labor. and Budget :: A formal statement of a company's future plans. liabilities. Benefits of budgeting are: . Selling expense budget :: A plan that lists the types and amounts of selling expenses expected during the budget period. and Budgeted balance sheet :: An accounting report that presents predicted amounts of the company's assets. and equity balances at the end of the budget period. D 114. and overhead costs to be incurred in manufacturing the units in the production budget. including receipts from any loans needed to maintain a minimum cash balance and repayments of such loans. liabilities. the expenses to be incurred. and Capital expenditure budget :: A plan that lists dollar amounts to be both received from disposing of plant assets and spent on purchasing additional plant assets to carry out the budgeted business activities. E 115. and Budgeted income statement :: An accounting report that presents predicted amounts of the company's revenues and expenses for the budgeting period. and Production budget :: A plan showing the number of units to be produced each month. 120. (2) Budgeting focuses management's attention on the future. usually expressed in monetary terms. as well as a budgeted income statement and balance sheet.

123. Budgets are developed in a bottom-up process to ensure fullest input participation. Control is administered through a budget committee of department heads. budgeted income statement. including the cash budget. . capital expenditures are budgeted. Each month. If changes are made. 124. 125. attainable. the remaining operations budgets are prepared. (1) Employees affected by a budget should be involved in the budgeting process. and desirable. The committee performs oversight and directs activities. and adds new monthly or quarterly budgets to replace those that have lapsed. expressed in monetary terms. The master budget usually starts with predictions of sales. at any point in time monthly or quarterly budgets are available for the next 12 months or four quarters. and budgeted balance sheet. Each department should provide budget input. The master budget is the comprehensive plan. the originating department must either adjust its proposals or explain why they are acceptable.(3) Perform budget evaluations carefully and allow opportunities to explain any failures. a company might revise its budgets to remove the month or quarter just passed. for an entire organization for a given period. the financial budgets can then be prepared. 122. Then. Using the sales projection. Rolling budgets cause management to continuously plan ahead. Communication between the originating department and the budget committee should continue to ensure both parties accept the budget as reasonable. Generally. Using the information from the operations and capital expenditures budgets. It is prepared from individual budgets of the various segments of the organization. This is a rolling budget. (2) The goals covered by the budget should be attainable.

sales units and dollars. It is based on the production volume determined from the production budget.126. The sales budget is normally prepared first because the other operating and financial budgets depend on information provided by this particular budget. T raditional budgeting lists items by the use of items (such as salaries. A manufacturing budget shows the budgeted costs for direct materials. 132. The sales budget shows planned sales units and the expected dollars from those sales. The amount to be purchased is multiplied times the purchase price per unit to determine the dollar amount to be purchased. 133. Activity-based budgeting requires management to list activities performed and their costs. Management can prearrange loans to cover anticipated cash shortages before they are needed. The sales budget is based on a careful analysis of forecasted economic and market conditions. The amount to be purchased is equal to the budgeted ending inventory in units plus budgeted units to be sold less beginning inventory in units. The capital expenditures budget lists the amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities. and depend on. direct labor. and expected beginning inventory of finished goods. Answers will vary . and proposed selling expenses such as advertising. supplies. It is generally the starting point in the budgeting process. 130. 131. In a manufacturing firm. based on budgeted sales. budgeted ending inventory of finished goods. and overhead. The cash budget also helps avoid a cash balance that is too large. etc. 129. it takes the place of the purchases budget that would be prepared by a merchandising firm. Knowledge of expected activities and their activity levels for the budget period enables management to plan for resources required to carry out their activities. A production budget shows the number of units to be produced each month. 127. business capacity. The plans of most departments are related to. Activity-based budgeting is a budget system based on expected activities.). A merchandise purchases budget is used to determine the number of units of merchandise inventory and the cost of merchandise inventory to be purchased. Feedback: 134. 128. Answers will vary Feedback: 136. Answers will vary Feedback: 135. A cash budget shows expected cash inflows and outflows during the budget period.

* 30% of next month's sales .

125 units Feedback: 138. Answers will vary .(1) July's beginning inventory = 25% x 4.500 = 1.

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000 = $214.000 (7) $0 (6) 20% x $560.000 (5) $107. Answers will vary (10) $112.000 = $515.000 (8) 45% x 80% x $525.000 = $107.000 + $180.000 (9) 50% x 80% x $535.000 (4) $0 (3) 50% x 80% x $525. Answers will vary Feedback: 142.000 (2) 45% x 80% x $500.000 = $180.000 = $112.000 = $497.000 Feedback: 144.000 (1) 20% x $535.Feedback: 141.000 = $189. Answers will vary Feedback: .000 + $210. Answers will vary Feedback: 143.000 + $214.000 = $210.000 + $189.

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964) x 1% = $16 * $3. Answers will vary .** ($3.600 x 1% = $36 Feedback: 146.600 .$1.

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slides. slides. ebooks.blogspot.o To donload download ore more ebooks.blogspot. Answers will vary . SM and and TB visit: visit: htp:/donloadslide.co http://downloadslide.com March cash receipts: Feedback: Sales in dollars per month: 148.

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com Feedback: 149. slides. Answers will vary Feedback: 150.o To donload download ore more ebooks. slides.blogspot.co http://downloadslide. Answers will vary . SM and and TB visit: visit: htp:/donloadslide. ebooks.blogspot.

Answers will vary . Answers will vary 22.Feedback: 151.

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000 Cash payments for purchases.T otal payments = $859.000 x 40%) = 680.000 x 50%) = 800. Answers will vary .600 For June purchases ($867. Answers will vary 25.000 From April sales ($1.600.000 x 20%) = $166.600 For May purchases ($830.000 From May sales ($1.700.625.000 Cash receipts from sales: Feedback: 154.000 x 80%) = $693. T otal collected = $1.000 x 10%) = $145.000 From June sales ($1.450.

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000 = $142.000 .Accounts payable balance = $900.000 Merchandise inventory balance = $1.000 x 10% = $175.660.020.000 Cash balance = $62.000 x 20% = $180.$1.700.000 Accumulated depreciation = $276.000 Accounts receivable balance = $1.000 .000 + $24.000 x 60% = $1.750.580.000 + $1.000 = $300.

Feedb 156. Answers will .

157. Budgeted Balance Sheet 162. Coordination of Business Activities. 163. 160. (Any two of the following five:). Promotes Analysis and Focus on the Future. Capital Expenditure Budgets. Financial Budgets Rolling budget 161. Communication Device 158. 159. Sales Budget. 166. Motivation of Employees. Cash Budget. A Basis for Performance Evaluation. 165. Budget Committee Operating Budgets. Activity-based budgeting Capital expenditures budget Cash budget Production budget Manufacturing budget . 164. Budgeted Income Statement.

ch23 Summary Category AACSB: Analytic AACSB: Communications AICPA BB: Resource Management AICPA FN: Measurement AICPA FN: Risk Analysis Blooms: Apply Blooms: Remember Blooms: Understand Difficulty: Easy Difficulty: Hard Difficulty: Medium Fundamental .Chapter 23 76 90 166 164 2 63 58 45 58 63 45 166 # of Questions .

46 Learning Objective: P3 Appendix 23A—Prepare production and manufacturing budgets. 20 . 38 Learning Objective: C2 Describe a master budget and the process of preparing it. 18 Learning Objective: P1 Prepare each component of a master budget and link each to the budgeting process. 5 Learning Objective: C1 Describe the importance and benefits of budgeting and the process of budget administration.Learning Objective: A1 Analyze expense planning using activity-based budgeting. 48 Learning Objective: P2 Link both operating and capital expenditures budgets to budgeted financial statements.