TRUE OR FALSE

1. A budget is an orderly and systematic plan covering the future activities of an

organizations, business firm or entity for a definite period of time based on
expected income and expenses. (rpcpa)
2. Plans are guide for measuring performance. (rpcpa)
3. An effective body to oversee preparation and administration of the budget is a
budget committee with representations from different departments such as
marketing, production, finance and administration. (rpcpa)
4. A budget not only assists management in planning operations, but also serves as
an important factor in the control of operations. (rpcpa)
5. Budgeted direct materials purchases equals desired beginning direct materials
inventory plus direct materials usage minus the ending materials inventory.
(rpcpa)
6. Operational goal is a goal that is express in specific terms in that it is clear
whether or not it has been achieved. (rpcpa)
7. The master budget of a manufacturing firm typically would include a production
budget but not a marketing budget. (rpcpa)
8. It is bad for a firm to have too much cash as it is bad to have too little cash.
(rpcpa)
9. Management by objections means that managers need not take any action if
objectives are being achieved. (rpcpa)
10. Master budget summarizes that variances can be computed even if a formal
standard cost accounting system is not used for product costing purposes.
(rpcpa)
11. Flexible budgets have variable and fixed components.
12. Cash budgeting is indispensable in managing liquidity.
13. Sales forecasting deals with trends in business environment.
14. The production budget is used in the preparation of the direct materials budgets,
direct labor, variable overhead, fixed overhead, selling expenses, and
administrative expenses budgets as well.
15. Fixed or static budgeting does not segregate costs into fixed and variable
components.
16. Zero-based budgeting (ZBB) considered past performances in anticipating the
future.
17. Life-cycle costing is determined in a given market condition and costs and profit
margin are adjusted accordingly.
18. Feedback controls pertain to completed activities, concurrent controls refer to
ongoing processes, feedforward controls anticipate and prevent problems.
19. Managers are not interested in the daily and regular cash position of the
business to effectively monitor operating activities.
20. The difference between current assets and current liabilities is called the working
capital.