TEN-MINUTE QUIZ - Circle the letter of the best response.
1. Which of the following is NOT true of the budgeting process?
A. Budgeting provides feedback to management to aid in assessing how well it’s reaching its
goals.
B. Budgets force managers to plan for the future.
C. Budgets force managers to consider relations among operations across the entire value
chain.
D. The performance report is prepared as part of the master budget.
2. The financial budget consists of which of the following components?
A. Budgeted balance sheet
B. Operating expenses
C. Sales budget
D. Budgeted income statement
3. Which of the following budgets is the comprehensive planning document for the entire
organization?
A. Sales budget
B. Capital expenditure budget
C. Master budget
D. Budgeted income statement
4. Which type of budgeting involves the participation of many levels of management?
A. Zero-based budgeting
B. Participative budgeting
C. Group budgeting
D. Department budgeting
5. Green Company has budgeted sales of 23,000 units for June and 25,000 units for July. Green's
policy is to maintain its finished goods inventory at 25% of the following month's sales.
Accordingly, at the end of May, Green had 5,750 units on hand. How many units must it produce
in June in order to support the sales goal and maintain its policy regarding finished goods
inventory?
A. 6,250 units
B. 23,000 units
C. 23,500 units
D. 29,250 units
6. Usually the first step in the budgetary process is the preparation of the:
A. budgeted balance sheet.
B. budgeted income statement.
C. combined cash budget.
D. sales budget.
7. Which of the following would appear on both the budgeted income statement and the cash
budget?
A. Depreciation expense
B. Capital expenditures
C. Rent expense
D. Equipment
8. Which of the following budgets would NOT be prepared by a service company?
A. Operating expense budget
B. Production budget
C. Budgeted income statement
D. Capital expenditures budget
9. Monroe Group is preparing its cash collections budget. Budgeted sales are $150,000 in July,
$175,000 in August, and $200,000 in September. Fifty percent of sales are cash sales; the
remainder is on account. Sales on account are expected to be collected 30% in the month of sale,
60% in the month following the month of sale, and 10% in the second month following the month
of sale. How much are anticipated cash collections during the month of September?
A. $190,000
B. $180,000
C. $130,000
D. $100,000
10. Beginning inventory is $120,000 and ending inventory is 60% of beginning inventory. Compute
cost of goods sold for the period if purchases are $400,000.
A. $ 72,000
B. $448,000
C. $520,000
D. $592,000
Answer Key to Subunit 9 Quiz
1. D
2. A
3. C
4. B
5. C
6. D
7. C
8. B
9. A
10. B