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act test 2 questions with answers.
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act test 2 questions with answers.Budgets are used to accomplish all of the following tasks, except ANS -.
recording actual results.
A rolling budget is a budget that ANS -is continuously updated, so that the next 12 months of
operations are always budgeted.
Which of the following is an advantage of the budgeting process? ANS -Coordinates the activities of the
organization
Which of the following budgets is a major part of the master budget and it focuses on the income
statement and its supporting schedules? ANS -operating
A manager considers all of the following when he or she prepares the cash budget except ANS -
depreciation expense.
In which of the following company types would the manager combine cost of goods sold, inventory, and
purchases into one budget? ANS -merchandising
The number of new products developed may be an example of measuring which perspective of the
balanced scorecard? ANS -internal bussiness
With regard to flexible budgets, which of the following statements is
true? ANS -Managers use them to help plan for uncertainties.
Which type of variance causes operating income to be lower than the budgeted operating income?
ANS -unfavorable variance
, The manager of the Walt Disney World Studios (a corporate division) may be in charge of a(n) ANS -
Investment center
Which of the following causes the master budget variance between the amounts in the master budget
and the flexible budget of a revenue center? ANS -The number of units sold differs from planned sales
levels
If selling and administrative expenses decrease while other expenses remain constant, what will happen
to return on investment (ROI)? ANS -ROI will increase
Which of the following is the operating income an investment center generates before subtracting
common fixed costs that are allocated to the center? ANS -Segment margin
Strategic planning ANS -Involves setting long-term goals that makes 10 5 to 10 years in the future
Participated budget it's beneficial why ANS -1. LOWER LEVEL MANAGERS ARE CLOSER TO THE ACTION
AND SHOULD HAVE REALISTIC KNOWLEDGE FOR CREATING BUDGETS
2. Managers are more likely to accept and be motivated by budget they help create
Participative budgeting disadvantages ANS -1. The budget can become too complex and time-
consuming
2. Managers may intentionally build slack into budget by overcompensating expenses or under
budgeting revenue
Why do people put slack in the budget ANS -1. Because of the uncertainty about the future
2. To make the performance look better when actual results are compared against budgeted amounts at
the end of the period
3. To have the resources they need in the event of a mandatory budget cut
Budget committee ANS -Help review submitted budgets, remove unwarranted slack, revise and
approve the final budget
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