CHAPTER 6: MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

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47. Budgeting
is used to help companies

a. plan to better satisfy customers.

b. anticipate potential problems.

c. focus on opportunities.

d. do all of the above.

48. A master
budget

a. includes only financial aspects of a plan
and excludes nonfinancial aspects.

b. is an aid to coordinating what needs to be
done to implement a plan.

c. includes broad expectations and visionary
results.

d. should not be altered after it has been
agreed upon.

49. Operating
decisions PRIMARILY deal with

a. the use of scarce resources.

b. how to obtain funds to acquire resources.

c. acquiring equipment and buildings.

d. satisfying stockholders.

50. Financing
decisions PRIMARILY deal with

a. the use of scarce resources.

b. how to obtain funds to acquire resources.

c. acquiring equipment and buildings.

d. preparing financial statements for
stockholders.

51. Budgeting provides all of the following
EXCEPT

a. a
means to communicate the organization’s short-term goals to its members.

b. support
for the management functions of planning and coordination.

c. a
means to anticipate problems.

d. an
ethical framework for decision making.

52. If initial budgets prove unacceptable,
planners achieve the MOST benefit from

a. planning
again in light of feedback and current conditions.

b. deciding
not to budget this year.

c. accepting
an unbalanced budget.

d. using
last year’s budget.

53. Operating budgets and financial budgets

a. combined
form the master budget.

b. are
prepared before the master budget.

c. are
prepared after the master budget.

d. have
nothing to do with the master budget.

54. A
good budgeting system forces managers to examine the business as they plan, so
they can

a. detect inaccurate historical records.

b. set specific expectations against which
actual results can be compared.

c. complete the budgeting task on time.

d. get promoted for doing a good job.

55. A budget should/can do all of the following
EXCEPT

a. be
prepared by managers from different functional areas working independently of
each other.

b. be
adjusted if new opportunities become available during the year.

c. help
management allocate limited resources.

d. become
the performance standard against which firms can compare the actual results.

56. A
limitation of comparing a company’s performance against actual results of last
year is that

a. it includes adjustments for future
conditions.

b. feedback is no longer a possibility.

c. past results can contain inefficiencies of
the past year.

d. the budgeting time period is set at one
year.

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