ch23 answer key

7/28/2019 Ch23 Answer Key

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ch23 Key


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http://downloadslide.blogspot.com1 . TRUE

2 . TRUE

3 . TRUE

4 . TRUE

5 . FALSE

6 . TRUE

7 . FALSE

8 . TRUE

9 . TRUE

1 . FALSE

2 . FALSE

3 . FALSE

4 . TRUE

5 . FALSE

6 . FALSE

7 . TRUE

8 . FALSE

9 . FALSE

10. TRUE

11. TRUE

12. TRUE

13. FALSE

14. TRUE

15. FALSE

16. FALSE

17. FALSE

18. FALSE

19. FALSE

20. FALSE

21. TRUE
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http://downloadslide.blogspot.com22. TRUE

23. TRUE

24. TRUE

25. FALSE

26. FALSE

27. FALSE


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37. FALSE

38. C

39. A

40. E

41. D

42. E

43. E

44. A

45. D

46. D

47. C

48. B

49. D

50. E

51. C

52. A

53. C

54. A

55. E

56. B

57. D

58. B

59. D

60. A

61. A

62. A

63. B

64. B

65. E

66. D

67. D

68. C

69. C

70. C

71. C

72. D

73. B


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113. D

114. E

115. A

116. C

117. B

118. D

119. Merchandise purchases budget :: A plan that shows the units or costs of merchandise to be purchased by a

merchandising company during the budget period. and Budgeted balance sheet:: An accounting report that

presents predicted amounts of the company's assets, liabilities, and equity balances at the end of the budget

period. and Sales budget:: A plan showing the units of goods to be sold and the sales to be derived; the usual

starting point in the budgeting process. and Budgeted income statement :: An accounting report that presents

predicted amounts of the company's revenues and expenses for the budgeting period. and Safety stock :: A

quantity of inventory or materials over the minimum to reduce the risk

of running short. and Master budget:: A comprehensive business plan that includes specific plans for expected

sales, the units of product to be produced, the merchandise or materials to be purchased, the expenses to be

incurred, the long-term assets to be purchased, and the amounts of cash to be borrowed or loans to be repaid, as

well as a budgeted income statement and balance sheet. and Budget :: A formal statement of a company's future

plans, usually expressed in monetary terms. and General and administrative expense budget :: A plan that

shows predicted operating expenses not included in the selling expenses budget. and Cash budget :: A plan that

shows the expected cash inflows and cash outflows during the budget period, including receipts from any loans

needed to maintain a minimum cash balance and repayments of such loans.

120. Selling expense budget :: A plan that lists the types and amounts of selling expenses expected during the

budget period. and Manufacturing budget :: plan that shows the predicted costs for direct materials, direct labor,

and overhead costs to be incurred in manufacturing the units in the production budget. and Budgeted balance

sheet :: An accounting report that presents predicted amounts of the company's assets, liabilities, and equity as

of the end of the budget period. and Budget :: A formal statement of future plans, usually expressed in

monetary terms. and Sales budget :: A plan showing the units of goods to be sold and the sales to be derived;

usually the starting point in the budgeting process. and Capital expenditure budget :: A plan that lists dollaramounts to be both received from disposing of plant assets and spent on purchasing additional plant assets to

carry out the budgeted business activities. and Continuous budgeting:: The practice of preparing budgets for a

selected number of several periods and revising those budgets as each period is completed. and Production

budget :: A plan showing the number of units to be produced each month. and Cash budget:: A plan that shows

the expected cash inflows and outflows during the budget period, including receipts from loans needed to

maintain a minimum cash balance and repayments of such loans. and Rolling budgets :: A new set of budgets

added to replace the ones that have lapsed as each budget period goes by.

(6) Budgeting serves as a means of communicating plans and instructions.

(5) Budgeting provides a means of coordinating business activities.

(4) Budgeting can be used as a motivator if applied correctly.

(3) Budgeting provides a basis for evaluating performance.

(2) Budgeting focuses management's attention on the future.

(1) Budgeting promotes good decision-making processes, including analysis and research.

121. Benefits of budgeting are:


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(3) Perform budget evaluations carefully and allow opportunities to explain any failures.

(2) The goals covered by the budget should be attainable.

122. (1) Employees affected by a budget should be involved in the budgeting process.

123. Each month, a company might revise its budgets to remove the month or quarter just passed, and adds new

monthly or quarterly budgets to replace those that have lapsed. Generally, at any point in time monthly orquarterly budgets are available for the next 12 months or four quarters. This is a rolling budget. Rolling budgets

cause management to continuously plan ahead.

124. Budgets are developed in a bottom-up process to ensure fullest input participation. Each department should

provide budget input. If changes are made, the originating department must either adjust its proposals or explain

why they are acceptable. Communication between the originating department and the budget committee should

continue to ensure both parties accept the budget as reasonable, attainable, and desirable. Control is administered

through a budget committee of department heads. The committee performs oversight and directs activities.

The master budget usually starts with predictions of sales. Using the sales projection, the remaining operations

budgets are prepared. Then, capital expenditures are budgeted. Using the information from the operations and

capital expenditures budgets, the financial budgets can then be prepared, including the cash budget, budgeted

income statement, and budgeted balance sheet.

125. The master budget is the comprehensive plan, expressed in monetary terms, for an entire organization for a

given period. It is prepared from individual budgets of the various segments of the organization.


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126. Activity-based budgeting is a budget system based on expected activities. Knowledge of expected activitiesand their activity levels for the budget period enables management to plan for resources required to carry out theiractivities. Traditional budgeting lists items by the use of items (such as salaries, supplies, etc.). Activity-basedbudgeting requires management to list activities performed and their costs.

127. The sales budget is normally prepared first because the other operating and financial budgets depend oninformation provided by this particular budget. The plans of most departments are related to, and dependon, sales units and dollars.

128. The sales budget shows planned sales units and the expected dollars from those sales. It is generally thestarting point in the budgeting process. The sales budget is based on a careful analysis of forecasted economic

and market conditions, business capacity, and proposed selling expenses such as advertising.

129. A merchandise purchases budget is used to determine the number of units of merchandise inventory andthe cost of merchandise inventory to be purchased. The amount to be purchased is equal to the budgeted endinginventory in units plus budgeted units to be sold less beginning inventory in units. The amount to be purchasedis multiplied times the purchase price per unit to determine the dollar amount to be purchased.

130. The capital expenditures budget lists the amounts to be both received from plant asset disposals and spentto purchase additional plant assets to carry out the budgeted business activities.

131. A cash budget shows expected cash inflows and outflows during the budget period. Management canprearrange loans to cover anticipated cash shortages before they are needed. The cash budget also helps avoida cash balance that is too large.

132. A production budget shows the number of units to be produced each month, based on budgeted sales,

budgeted ending inventory of finished goods, and expected beginning inventory of finished goods. In amanufacturing firm, it takes the place of the purchases budget that would be prepared by a merchandising firm.

133. A manufacturing budget shows the budgeted costs for direct materials, direct labor, and overhead. It isbased on the production volume determined from the production budget.

Feedback:

134. Answers will vary

Feedback:


Feedback:



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* 30% of next month's sales


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(1) July's beginning inventory = 25% x 4,500 =

1,125 units Feedback:



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Feedback:


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Feedback:


Feedback:


Feedback:


(10) $112,000 + $189,000 + $214,000 = $515,000

(9) 50% x 80% x $535,000 =

$214,000 (8) 45% x 80% x

$525,000 = $189,000 (7) $0

(6) 20% x $560,000 = $112,000

(5) $107,000 + $180,000 + $210,000 = $497,000

(4) $0

(3) 50% x 80% x $525,000 =

$210,000 (2) 45% x 80% x$500,000 = $180,000 (1) 20%

x $535,000 = $107,000

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** ($3,600 - $1,964) x 1% = $16

* $3,600 x 1% = $36

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March cash receipts:

Feedback:

Sales in

dollars per

month: 148.

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Feedback:



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Feedback:


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Feedback:


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Total payments = $859,600

For June purchases ($867,000 x 80%) =

$693,600 For May purchases ($830,000

x 20%) = $166,000 Cash payments for

purchases;

Total collected = $1,625,000

From June sales ($1,700,000 x 40%) =

680,000 From May sales ($1,600,000 x

50%) = 800,000 From April sales

($1,450,000 x 10%) = $145,000 Cash

receipts from sales:

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Feedback:


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Accounts payable balance = $900,000 x 20% =

$180,000 Accumulated depreciation = $276,000

+ $24,000 = $300,000 Merchandise inventory

balance = $1,750,000 x 10% = $175,000 Accounts

receivable balance = $1,700,000 x 60% =

$1,020,000 Cash balance = $62,000 +

$1,660,000 - $1,580,000 = $142,000


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157. (Any two of the following five:); Promotes Analysis and Focus on the Future; A Basis forPerformance Evaluation; Motivation of Employees; Coordination of Business Activities;Communication Device

158. Budget Committee

159. Operating Budgets; Capital Expenditure Budgets, Financial Budgets

160. Rolling budget

161.Sales Budget; Cash Budget, Budgeted Income Statement, Budgeted Balance Sheet

162. Activity-based budgeting

163. Capital expenditures budget

164. Cash budget

165. Production budget

166. Manufacturing budget


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ch23 SummaryCategory # of Questions

AACSB: Analytic 76

AACSB: Communications 90

AICPA BB: Resource Management 166

AICPA FN: Measurement 164

AICPA FN: Risk Analysis 2

Blooms: Apply 63

Blooms: Remember 58

Blooms: Understand 45

Difficulty: Easy 58

Difficulty: Hard 63

Difficulty: Medium 45

Fundamental - Chapter 23 166


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Learning Objective: A1 Analyze expense planning using activity-based budgeting. 5

Learning Objective: C1 Describe the importance and benefits of budgeting and the process of budget

administration. 38

Learning Objective: C2 Describe a master budget and the process of preparing it. 18

Learning Objective: P1 Prepare each component of a master budget and link each to the budgeting process.

48

Learning Objective: P2 Link both operating and capital expenditures budgets to budgeted financial

statements. 46

Learning Objective: P3 Appendix 23APrepare production and manufacturing budgets. 20


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ch23 answer key

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