THEORIES – TEST BANK 1

1. Which of the following describes the order in which the four type of budgets must be prepared?

a. Production, sales, direct materials purchases, cash received on account

b. Sales, production, direct materials purchases, cash budget
c. Cash receipts, direct labor, production, sales
d. Sales, direct materials purchases, production, cash disbursements

2. The budget that adjusts unit sales for beginning and ending inventories of finished goods is the a.
Production budget
b. Ending inventor of finished goods budget
c. Purchases budget
d. Cost of goods sold budget

3. These are the purposes of budgeting, except

a. It forces managers to plan

b. It provides relevant information for sound economic decisions
c. It aids in the use resources that can be used for implementation
d. It improves communication

4. This type of budget is concerned with the activities of the firm that generates income.

a. Master budget
b. Operating budget
c. Financial budget
d. Continuous budget

5. This type of budget is important because the information taken from it will be used to reflect the
balance of inventories in the statement of financial position
a. Sales budget
b. Production budget
c. Ending finished goods inventory budget
d. Overhead budget

6. This type of budget is consists of the estimated expenditures for the overall organization and
operation of the company.
a. Production budget
b. Administrative budget
c. Overhead budget
d. Marketing budget

7. When all the operating budgets are prepared, this budget will be completed
a. Budgeted income statement
b. Cash budget
c. Budgeted balance sheet
d. Sales budget

8. This budget will be the basis for all of the other operating budgets and most of the financial budgets
a. Budgeted income statement
b. Cash budget
c. Budgeted balance sheet
d. Sales budget
9. This budget shows the needed number of units to satisfy the expected sales and desired ending
inventories of the firm
a. Budgeted income statement
b. Cash budget
c. Budgeted balance sheet
d. Sales budget

10. This budget shows the expected indirect manufacturing costs of production
a. Production budget
b. Overhead budget
c. Sales budget
d. Labor budget

PROBLEMS – TEST BANK 1

THEORIES – TEST BANK 2
PROBLEMS – TEST BANK 2
THEORY – TEST BANK 3
ANSWER KEY
TEST BANK 1 – THEORES TEST BANK 1 – PROBLEMS TEST BANK 2
TRUE OR FALSE COMPLETION MULTIPLE CHOICE
1. F 2. T 1. Strategic planning 1. D 2. B 3. D 4. A 5. B
3. T 4. T 2. Tactical planning 6. B 7. D 8. A 9. D 10. A
5. F 6. T 3. Master budget 11. C 12. C 13. D 14. A 15. A
7. T 8. F 4. Operating budget 16. D 17. D 18. A 19. C 20. A
9. F 10. T 5. Financial budget 21. A 22. B 23. B 24. D 25. B
11. T 12. T 6. Sales budget 26. C 27. A 28. D 29. A 30. C
13. F 14. F 7. Pro-forma f/s 31. A 32. D 33. B 34. C 35. D
15. T 16. F 8. Production budget 36. A 37. D 38. C 39. D 40. C
17. T 18. T 9. DM, DL, OH 41. A 42. C 43. B 44. A 45. D
19. T 20. F 10. Capital budget 46. D 47. D 48. D 49. C 50. D
21. F 22. T 11. Continuous budget 51. B 52. C 53. B 54. D 55. A
23. T 24. F 12. Imposed budget 56. C 57. C 58. D 59. D 60. C
25. F 26. T 13. Participatory budget 61. A 62. D 63. C 64. A 65. B
27. T 28. F 14. Budgetary slack 66. D 67. D 68. D 69. D 70. B
29. F 30. T 71. D 72. D 73. B 74. D 75. D
31. T 32. T 76. B 77. C 78. C 79. D 80. D
33. T 34. T 81. A 82. A 83. C

TEST BANK 3