Question 1

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n):
A) Capital expenditures budget.
B) Operating budget.
C) Rolling budget.
D) Cash budget.
E) Income statement.

Accepted Answer

A cash budget is a financial plan that outlines the expected cash inflows and outflows during a specified period. It includes all receipts and disbursements, including payments for loans taken out to maintain a minimum cash balance and repayments of such loans. A capital expenditures budget focuses on planned expenditures for long-term assets, while an operating budget details the anticipated revenues and expenses for the day-to-day operations of the business. A rolling budget adjusts continually throughout the year, and an income statement shows revenue and expenses over a specific period but does not include cash flows. Therefore, the best choice is D, cash budget.

Question 2

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:
A) Budgeted income statement.
B) Budgeted balance sheet.
C) Master plan.
D) Rolling income statement.
E) Continuous profit statement.

Accepted Answer

A budgeted income statement presents predicted amounts of a company's revenues and expenses for a specific period. It is an essential tool used in managerial accounting to help a business plan and manage its finances effectively. Budgeted balance sheets present predicted amounts of assets, liabilities, and equity, while a master plan is a comprehensive document detailing a company's long-term goals and objectives. Rolling income statements and continuous profit statements are not standard terms in managerial accounting.

Question 3

If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted purchases should be:
A) $860
B) $1,100
C) $1,960
D) $9,160
E) $11,360

Accepted Answer

Budgeted purchases = $9,400 + $10,260 − $8,300 = $11,360

Question 4

Chocolate Co. reports the following information from its sales budget:  Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:
A) $30,000.
B) $78,000.
C) $108,000.
D) $120,000.
E) $130,500.

Accepted Answer

11eaadfd_cd00_bc62_95d8_9728dcbcc3c0_TB6948_00

Question 5

Long-term liability balances for the budgeted balance sheet are obtained from:
A) The cash budget and capital expenditures budget.
B) The cash budget and sales budget.
C) The cash budget and budgeted income statement.
D) The sales budget and production budget.
E) The asset budget and debt budget.

Accepted Answer

Long-term liabilities represent debts that extend beyond the next 12 months. The cash budget is the primary source for determining the amount of long-term debt a company must take on. Additionally, the capital expenditures budget will detail the amount of funds needed to finance long-term investment projects. Both of these budgets are necessary to accurately determine the long-term liability balances for the budgeted balance sheet.

Question 6

The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of Product B is 3,000 units. Total budgeted sales of both products for the year would be:
A) $42,000.
B) $200,000.
C) $264,000.
D) $464,000.
E) $500,000.

Accepted Answer

(20,000 × $10) + (22,000 × $12) = $464,000

Question 7

Which of the following would not be used in preparing a cash budget for October?
A) Beginning cash balance on October 1.
B) Budgeted sales and collections for October.
C) Estimated depreciation expense for October.
D) Budgeted salaries expense for October.
E) Budgeted capital equipment purchases for October.

Accepted Answer

Depreciation expense is a non-cash expense and therefore would not be included in a cash budget. The other options would all be relevant in preparing a cash budget.

Question 8

Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash payments during August. Southland Company wants to maintain a minimum cash balance of $10,000. The preliminary cash balance at the end of August before any loan activity is:
A) $13,300.
B) $137,800.
C) ($13,700).
D) $3,300.
E) $27,000.

Accepted Answer

11eaadfd_cd00_472f_95d8_e353e1214b90_TB6948_00

Question 9

Which of the following budgets is not completed before a cash budget is prepared?
A) Capital expenditures budget.
B) Sales budget.
C) Merchandise purchases budget.
D) General and administrative expense budget.
E) Budgeted income statement.

Accepted Answer

The budgeted income statement is prepared after the cash budget because it is based on the information provided in the cash budget. The other budgets listed (capital expenditures, sales, merchandise purchases, and general and administrative expense) are all completed before the cash budget is prepared because they provide information that is necessary for the cash budget.

Question 10

Western Company is preparing a cash budget for June. The company has $12,000 in cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash payments during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company has no loans outstanding. To maintain the $10,000 required balance, during June the company must:
A) Borrow $4,500.
B) Borrow $2,500.
C) Borrow $10,000.
D) Repay $7,500.
E) Repay $2,500.

Accepted Answer

11eaadfd_ccff_f90e_95d8_67d488169c02_TB6948_00

Question 11

Ruiz Co.'s budget includes the following credit sales for the current year: September, $145,000; October, $136,000; November, $120,000; December, $157,000. Credit sales are collected as follows: 15% in the month of sale, 50% in the first month after sale, and 35% in the second month after sale. How much cash can the company expect to collect in December as a result of current and past credit sales?
A) $23,550.
B) $107,600.
C) $83,550.
D) $157,000.
E) $131,150.

Accepted Answer

11eaadfd_cd01_a6c6_95d8_15fde3f503e6_TB6948_00

Question 12

In preparing financial budgets:
A) The budgeted balance sheet is usually prepared last.
B) The cash budget is usually not prepared.
C) The budgeted income statement is usually not prepared.
D) The capital expenditures budget is usually prepared last.
E) The budgeted income statement is usually prepared last.

Accepted Answer

The budgeted balance sheet is usually prepared last because it requires information from the other budgets (such as the cash budget and capital expenditures budget) in order to accurately project the company's financial position at the end of the budget period. The cash budget and budgeted income statement are typically prepared earlier in the budgeting process.

Question 13

Southland Company is preparing a cash budget for August. The company has $17,000 cash at the beginning of August and anticipates $120,800 in cash receipts and $134,500 in cash payments during August. Southland Company wants to maintain a minimum cash balance of $10,000. To maintain the minimum cash balance of $10,000, the company must borrow:
A) $0.
B) $10,000.
C) $6,700.
D) $7,000.
E) $27,700.

Accepted Answer

11eaadfd_cd00_6e40_95d8_09f1bd6527b7_TB6948_00

Question 14

In preparing a budgeted balance sheet, the dollar amount of Accounts Receivable can be derived from:
A) The purchases budget and schedule of cash payments.
B) The sales budget and the schedule of cash receipts.
C) The capital expenditures budget and purchases budget.
D) The budgeted income statement and budgeted balance sheet.
E) The selling expenses budget and the schedule of cash receipts.

Accepted Answer

The dollar amount of accounts receivable can be derived from the sales budget and the schedule of cash receipts. The sales budget estimates the amount of sales that will be made during the budget period and the cash receipts schedule shows the expected timing of the collections from those sales. The difference between the two amounts represents the accounts receivable balance.

Question 15

A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, 25% the following month, and 5% is uncollectible. Projected sales for December, January, and February are $60,000, $85,000 and $95,000, respectively. The February expected cash receipts from current and prior credit sales is:
A) $57,000
B) $61,200
C) $66,400
D) $80,750
E) $90,250

Accepted Answer

Amount collected in February:
 11eaadfd_cd02_4307_95d8_9729ad6aa833_TB6948_00

Question 16

Junior Snacks reports the following information from its sales budget:  All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:
A) $146,200.
B) $85,800.
C) $151,000.
D) $236,800.
E) $60,400.

Accepted Answer

11eaadfd_cd01_0a84_95d8_f7e563ee802e_TB6948_00

Question 17

Which of the following accounts would appear on a budgeted balance sheet?
A) Income tax expense.
B) Accounts receivable.
C) Sales commissions.
D) Depreciation expense.
E) All of the choices are correct.

Accepted Answer

Only accounts with a balance sheet impact, such as assets (like accounts receivable) and liabilities, would appear on a budgeted balance sheet. Expenses like income tax expense, sales commissions, and depreciation expense are all reflected on the income statement.

Question 18

Justin Company's budget includes the following credit sales for the current year: September, $25,000; October, $36,000; November, $30,000; December, $32,000. Credit sales are collected as follows: 15% in the month of sale, 60% in the first month after sale, 20% in the second month after sale, and 5% is uncollectible. How much cash can Justin expect to collect in November as a result of current and past credit sales?
A) $19,700.
B) $28,500.
C) $30,000.
D) $31,100.
E) $33,900.

Accepted Answer

11eaadfd_cd01_58a5_95d8_e59da43d902a_TB6948_00

Question 19

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n):
A) Rolling balance sheet.
B) Continuous balance sheet.
C) Budgeted balance sheet.
D) Cash balance sheet.
E) Operating balance sheet.

Accepted Answer

A budgeted balance sheet is a report that summarizes a company's financial position as of the end of the budget period. It presents the expected amounts of assets, liabilities, and equity based on the budgeted income statement and other assumptions. The other options (A, B, D, and E) do not accurately describe this type of report.

Question 20

Coomb's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for this quarter should be:
A) $134,000.
B) $109,000.
C) $91,500.
D) $25,000.
E) $91,000.

Accepted Answer

Budgeted purchases = $41,500 + (80% × $125,000) − $32,500 = $109,000

Quiz 7: Master Budgets and Performance Planning

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n) :

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:

If budgeted beginning inventory is $8,300, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted purchases should be:

Chocolate Co. reports the following information from its sales budget: Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Long-term liability balances for the budgeted balance sheet are obtained from:

Which of the following would not be used in preparing a cash budget for October?

Which of the following budgets is not completed before a cash budget is prepared?

In preparing financial budgets:

In preparing a budgeted balance sheet, the dollar amount of Accounts Receivable can be derived from:

Junior Snacks reports the following information from its sales budget: All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:

Which of the following accounts would appear on a budgeted balance sheet?

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n) :

Coomb's Fashions forecasts sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is targeted at $41,500, budgeted purchases for this quarter should be: