Budgetary Control
- Which of the following is not directly considered as a function of management accounting ?
(a) Financial planning
(b) Decision making
(c) Reporting
(d) Cost computation - A Ltd is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared?
(1) Sales budget
(2) Cash budget
(3) Production budget
(4) Purchase budget
(5) Finished goods inventory budget
(a) (2), (3), (4), (5), (1)
(b) (1), (5), (3), (4), (2)
(c) (1), (4), (5), (3), (2)
(d) (4), (5), (3), (1), (2) - A sales budget is:
(a) Derived from the production budget.
(b) Management’s best estimate of sales revenue for the year.
(c) Not the starting point for the master budget.
(d) Prepared only for credit sales. - Each of the following budgets is used in preparing the budgeted income statement except the:
(a) Sales budget.
(b) Selling and administrative budget.
(c) Capital expenditure budget.
(d) Direct labor budget. - The budget for a merchandiser differs from a budget for a manufacturer because:
(a) A merchandise purchases budget replaces the production budget.
(b) The manufacturing budgets are the same for both.
(c) A merchandiser has direct labour and direct materials in its merchandising budget but not manufacturing overhead.
(d) Both a and c above - The essentials of effective budgeting do not include:
(a) Top-down budgeting.
(b) Management acceptance.
(c) Research and analysis.
(d) Sound organizational structure. - The basic difference between a fixed budget and flexible budget is that a fixed budget…….
(a) Is concerned with a single level of activity, while flexible budget is prepared for different levels of activity
(b) Is concerned with fixed costs, while flexible budget is concerned with variable costs.
(c) Is fixed while flexible budget changes
(d) None of these - A Local Authority is preparing cash Budget for its refuse disposal department. Which of the following items would not be included in the cash budget?
(a) Capital cost of a new collection vehicle
(b) Depreciation of the machinery
(c) Operatives wages
(d) Fuel for the collection Vehicles - ___ is a detailed budget of cash receipts and cash expenditure incorporating both revenue and capital items.
(a) Cash Budget
(b) Capital Expenditure Budget
(c) Sales Budget
(d) Overhead Budget - ___________ is a summary of all functional budgets in a capsule form.
(a) Functional Budget
(b) Master Budget
(c) Long Period Budget
(d) Flexible Budget - A budget which is prepared in a manner so as to give the budgeted cost for any level of activity is known as:
(a) Master budget
(b) Zero base budget
((c) Functional budget
(d) Flexible budget - A flexible budget is :
(a) A budget that is designed to furnish budgeted costs at different activity levels
(b) A budget that will be changed at the end of the month in order to reflect the actual costs of a department
(c) A budget that comprises variable costs only
(d) A budget that is designed for a specific planned output level - The budget which usually takes the form of budgeted profit and loss account and balance sheet is known as –
(a) Cash budget
(b) Master budget
(c) Flexible budget
(d) Sales budget. - While preparing cash budget, which of the following items would not be included-
(a) Interest paid to debenture holders
(b) Salaries and wages
(c) Bonus shares issued
(d) Income-tax paid. - A fixed budget is one which:
(a) is a plan for capital expenditure in monetary terms
(b) is designed to remain unchanged irrespective of the volume of output or turnover attained
(c) deals with income and expenditure applicable to a particular function
(d) deals with none of these