Multiple Choice Questions
1.Expressing plans for a business in financial terms is commonly called:
A. master planning.
B. budgeting.
C. strategic planning.
D. operational planning.
2.A company's numerous specific budgets (sales, inventory purchases, etc.) together are referred to as the:
A. grand plan.
B. strategic plan.
C. current budget.
D. master budget.
3.Select the
incorrect
statement about budgeting committees.
A. Membership on the budgeting committee is restricted most often to accountants because the budget involves numbers.
B. Budgeting committees usually have responsibility for the coordination of budgeting activities.
C. The budgeting committee is responsible for settling disputes between various departments over budget matters.
D. One of the responsibilities of the budget committee is to monitor the organization's progress toward achieving its budget standards.
4.Select the
incorrect
statement about the planning process.
A. The longer the time period, the more specific the plans.
B. Planning decisions can often be sub-divided into three distinct planning phases, short-term, intermediate-term, and long-term.
C. The nature of planning changes with the length of the time period being considered.
D. The shorter the time period, the less general the plans.
5.Select the
correct
statement about the master budget.
A. The master budget is a group of detailed budgets and schedules representing the company's operating and financial plans for the past accounting period.
B. The master budget usually includes operating budgets and capital budgets, and pro forma financial statements.
C. The budgeting process usually begins with preparing the strategic budgets.
D. Preparing the master budget begins with the cash budget.
6.Planning concerned with long-range decisions such as defining the scope of the business is referred to as:
A. operations budgeting.
B. master planning.
C. capital budgeting.
D. strategic planning.
7.Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:
A. capital budgeting.
B. operations budgeting.
C. facilities planning.
D. strategic planning.
8.Budgeting that involves the development of a master budget to direct the firm's activities over the short-term is referred to as:
A. capital budgeting.
B. operations budgeting.
C. strategic planning.
D. None of these.
9.The master budget normally covers:
A. Three months.
B. 1 year.
C. 1-5 years.
D. 5-10 years.
10.The budgeting process that involves adding a month to the end of the budget period at the end of each month, thus maintaining a twelve-month planning horizon, is referred to as:
A. participative budgeting.
B. capital budgeting.
C. continuous budgeting.
D. zero-based budgeting.