Master budget includes: a Sales budget only b All functional budgets c Flexible budgets only d Last years budget 12... Sales budget is limited by: a Fixed costs b Principal budget factor
Trang 1EXAM CHAPTER 16: BUDGETING
Duration: 90 minutes
Number of Questions: 50 Multiple Choice Questions
Name:
Student ID:
Note: Choose the most correct answer for each question Each correct answer is worth 1
point.
Trang 21 Part 1: Exam Questions
1 What best describes a principal budget factor?
a) Affects all budget centres b) Built into all budgets c) Controllable by man-ager d) Limits organisation activities
2 Correct statements about spreadsheets? (1) Graphical data display (2) Produces
flexible budgets (3) Best for large data storage
a) 1 only b) 1 and 2 c) 2 only d) 1, 2, and 3
3 Correct statements about budget administration? (1) Committee ensures
coordi-nation (2) Master budget prepared first (3) Manual at process end
a) 1 only b) 1 and 2 c) 1 and 3 d) 1, 2, and 3
4 What best describes a flexible budget?
a) Monthly, reflects days b) Variable costs only c) Updated mid-year d) Shows revenue/costs at activity levels
5 What is a budget centre?
a) Department with no budget b) Unit with specific budget c) Entire organi-zation d) Budgeting software
6 Example of principal budget factor?
a) Total revenue b) Sales demand c) Fixed costs d) Employee wages
7 Flexible budgets adjust for:
a) Calendar days b) Activity levels c) Fixed costs only d) Mid-year results
8 Role of budget committee?
a) Approve budgets only b) Coordinate budgets c) Prepare master budget d) Monitor daily costs
9 Zero-based budgeting requires:
a) Prior budget as base b) Justifying all costs c) Fixed cost allocation d) Revenue-based budgeting
10 Budget manual includes:
a) Final budget figures b) Budgeting procedures c) Actual results d) Variance reports
11 Master budget includes:
a) Sales budget only b) All functional budgets c) Flexible budgets only d) Last years budget
12 Incremental budgeting uses:
a) Zero base b) Prior budget as base c) Activity-based costing d) Market prices
13 Flexible budget is useful for:
a) Fixed cost analysis b) Performance evaluation c) Long-term planning d)
Trang 3Capital budgeting
14 Sales budget is prepared:
a) After production budget b) First, if demand limits c) At year-end d) Without demand data
15 Budget variance is:
a) Planned vs actual difference b) Fixed cost allocation c) Revenue forecast d) Budget approval
16 Rolling budget is:
a) Fixed for one year b) Updated continuously c) Zero-based d) Activity-based only
17 Budget coordination ensures:
a) Higher profits b) Budget alignment c) Fixed cost reduction d) Employee training
18 Principal budget factor is identified:
a) After master budget b) Before budget preparation c) During variance anal-ysis d) At year-end
19 Flexible budget shows:
a) Fixed costs only b) Costs at activity levels c) Actual results d) Long-term forecasts
20 Budget manual is used:
a) After budget approval b) During budget preparation c) For variance report-ing d) For final results
21 Zero-based budgeting is:
a) Based on prior budgets b) Cost-justified from scratch c) Revenue-driven d) Fixed cost-focused
22 Master budget is prepared:
a) First in process b) After functional budgets c) Without sales data d) Mid-year
23 Incremental budgeting is:
a) Cost-justified anew b) Adjusted from prior budget c) Activity-based d) Long-term focused
24 Flexible budget aids:
a) Capital investment b) Variance analysis c) Fixed cost allocation d) Rev-enue forecasting
25 Sales budget depends on:
a) Production capacity only b) Market demand c) Fixed costs d) Last years sales only
Trang 426 Budget committee includes:
a) External auditors b) Department managers c) Customers d) Suppliers
27 Rolling budget extends:
a) One month b) Fixed period c) Continuously forward d) Last years budget
28 Example of principal budget factor?
a) Total expenses b) Machine capacity c) Employee salaries d) Revenue targets
29 Flexible budget is prepared:
a) After actual results b) For activity levels c) For fixed costs only d) Annu-ally only
30 Budget manual outlines:
a) Actual performance b) Budgeting responsibilities c) Final budget figures d) Variance results
31 Zero-based budgeting suits:
a) Stable operations b) Cost control focus c) Revenue-driven firms d) Fixed budget firms
32 Master budget integrates:
a) Sales budget only b) All budgets c) Flexible budgets only d) Variance reports
33 Incremental budgeting is best for:
a) New projects b) Stable operations c) Cost reduction d) Activity-based costing
34 Flexible budget helps compare:
a) Fixed vs variable costs b) Actual vs budgeted performance c) Revenue vs expenses d) Short vs long-term budgets
35 Sales budget is limited by:
a) Fixed costs b) Principal budget factor c) Employee wages d) Last years profits
36 Budget committee ensures:
a) Budget approval only b) Budget alignment c) Daily monitoring d) Rev-enue forecasting
37 Rolling budget is updated:
a) Annually b) Periodically c) Once per cycle d) For fixed costs only
38 Principal budget factor affects:
a) Only sales budget b) All budget preparation c) Fixed costs only d) Vari-ance analysis
39 Flexible budget is used for:
Trang 5a) Long-term planning b) Performance evaluation c) Capital budgeting d) Fixed cost analysis
40 Budget manual is prepared:
a) After budgeting b) Before budgeting c) During variance analysis d) For final results
41 Zero-based budgeting requires:
a) Prior budget as base b) Full cost justification c) Revenue focus d) Fixed cost allocation
42 Master budget includes:
a) Sales budget only b) All functional budgets c) Actual results d) Last years budget
43 Incremental budgeting adjusts:
a) From zero base b) From prior budget c) For activity levels d) For market prices
44 Flexible budget shows costs at:
a) Fixed levels b) Various activity levels c) Actual results only d) Long-term forecasts
45 Sales budget uses:
a) Fixed costs b) Market demand data c) Last years profits d) Employee wages
46 Budget committees main task?
a) Approve budgets b) Coordinate budgets c) Monitor daily costs d) Forecast revenue
47 Rolling budget is best for:
a) Fixed-term planning b) Dynamic environments c) Stable operations d) Zero-based budgeting
48 Principal budget factor is:
a) Always sales b) A limiting constraint c) Fixed costs d) Revenue target
49 Flexible budget aids in:
a) Capital investment b) Variance analysis c) Fixed cost allocation d) Long-term forecasting
50 Budget manual includes:
a) Final budget figures b) Budgeting procedures c) Actual performance d) Variance reports
Trang 62 Part 2: Answers and Explanations
1 Answer: d) The principal budget factor (e.g., demand) limits activities, guiding
budget preparation Its not just affecting centres, built-in, or manager-controlled
2 Answer: b) Spreadsheets support graphs and flexible budgets via formulas Databases,
not spreadsheets, are best for large data storage
3 Answer: a) Budget committee coordinates budgets Master budget is last, and
manual is prepared before/during, not at end
4 Answer: d) Flexible budget shows revenue/costs at activity levels, not days,
variable costs only, or mid-year updates
5 Answer: b) Budget centre is a unit with a specific budget, not the entire
organi-zation or software
6 Answer: b) Sales demand limits activities as a principal budget factor, unlike
revenue, costs, or wages
7 Answer: b) Flexible budgets adjust for activity levels, not days, fixed costs, or
results
8 Answer: b) Budget committee coordinates budgets for alignment, not just
ap-proval or preparation
9 Answer: b) Zero-based budgeting justifies all costs anew, unlike incremental or
revenue-based methods
10 Answer: b) Budget manual outlines procedures, not final figures or results.
11 Answer: b) Master budget integrates all functional budgets, not just sales or
flexible budgets
12 Answer: b) Incremental budgeting adjusts prior budget, not zero-based or
activity-based
13 Answer: b) Flexible budgets aid performance evaluation, not capital or fixed cost
analysis
14 Answer: b) Sales budget is first if demand limits, not after production or without
data
15 Answer: a) Variance is the planned vs actual difference, not allocation or
fore-casting
16 Answer: b) Rolling budget updates continuously, not fixed or zero-based.
17 Answer: b) Coordination ensures budget alignment, not just profits or training.
18 Answer: b) Principal factor is identified before budgeting, not after or during
analysis
Trang 719 Answer: b) Flexible budget shows costs at activity levels, not fixed or actual
results
20 Answer: b) Budget manual is used during preparation, not after or for reporting.
21 Answer: b) Zero-based budgeting justifies costs from scratch, not prior budgets.
22 Answer: b) Master budget is prepared after functional budgets, not first or
mid-year
23 Answer: b) Incremental budgeting adjusts prior budgets, not zero-based or
activity-based
24 Answer: b) Flexible budgets aid variance analysis, not capital or revenue
fore-casting
25 Answer: b) Sales budget depends on market demand, not just capacity or profits.
26 Answer: b) Budget committee includes managers, not external parties or
cus-tomers
27 Answer: c) Rolling budget extends forward continuously, not fixed or one month.
28 Answer: b) Machine capacity limits production, unlike expenses or salaries.
29 Answer: b) Flexible budget is prepared for activity levels, not after results.
30 Answer: b) Budget manual outlines responsibilities, not final figures or results.
31 Answer: b) Zero-based budgeting suits cost control, not stable or revenue-driven
firms
32 Answer: b) Master budget integrates all budgets, not just sales or results.
33 Answer: b) Incremental budgeting suits stable operations, not new projects or
cost reduction
34 Answer: b) Flexible budget compares actual vs budgeted performance, not just
costs
35 Answer: b) Sales budget is limited by the principal factor, not costs or profits.
36 Answer: b) Budget committee ensures budget alignment, not just approval or
monitoring
37 Answer: b) Rolling budget updates periodically, not annually or once.
38 Answer: b) Principal factor affects all budget preparation, not just sales or costs.
39 Answer: b) Flexible budget aids performance evaluation, not capital or long-term
planning
40 Answer: b) Budget manual is prepared before budgeting, not after or for analysis.
Trang 841 Answer: b) Zero-based budgeting requires full cost justification, not prior budgets.
42 Answer: b) Master budget includes all functional budgets, not just sales or results.
43 Answer: b) Incremental budgeting adjusts from prior budget, not zero or
activity-based
44 Answer: b) Flexible budget shows costs at various activity levels, not fixed or
actual
45 Answer: b) Sales budget uses market demand data, not costs or profits.
46 Answer: b) Budget committee coordinates budgets for consistency, not just
ap-proval
47 Answer: b) Rolling budget suits dynamic environments, not stable or fixed-term.
48 Answer: b) Principal budget factor is a limiting constraint, not always sales or
costs
49 Answer: b) Flexible budget aids variance analysis, not capital or long-term
fore-casting
50 Answer: b) Budget manual includes procedures, not performance or results.